APPLAUSE TO SELL NAME BANKRUPT TOY COMPANY'S LABEL TO BE SHED FOR $4 MILLION.

Byline: Brent Hopkins Staff Writer

NEWHALL - Bankrupt toy maker Applause LLC will sell its name to rival plush products company Russ Berrie and Co. Inc. for $4 million, the Daily News learned Wednesday.

The stuffed-animal specialist, once an industry heavyweight known for its Mickey Mouse, California Raisin and Smurf plush toys, has seen its fortunes reverse dramatically in the past six weeks. After its owner, chairman and chief executive officer, Bob Solomon, took his own life Aug. 20, the company moved from its Woodland Hills headquarters to a Newhall strip mall and cut 25 employees. Solomon's relatives handed interim control to nephew David Socha, and several days later, Applause entered involuntary bankruptcy.

The company changed to Chapter 11 bankruptcy Sept. 23, allowing it to reorganize. Corporate counsel Gerard Casale said Wednesday that it had filed with the bankruptcy court to sell just the name to Russ Berrie in an all-cash transaction. To maximize return to creditors, the court will auction the name Oct. 14. If no one outbids it, Russ Berrie will have the rights to one of the gift industry's most recognized monikers.

``Bob was behind it,'' Casale said. ``We were looking at a renewal of the company before his death, perhaps under the Dakin name. We'd identified this as a way to turn this around and wipe out some debt.''

The company owes about $8 million to creditors, so the transaction will clear at least half of its slate. Casale said no final decision had been made on the name the company would adopt, though it did keep the rights to its R. Dakin & Co. subsidiary. The proposed deal does not include any characters or licenses, allowing the company to continue to produce its licensed Snoopy and Raggedy Ann and Andy characters and the proprietary Dream Pets.

Russ Berrie President and CEO Andy Gatto, reached late Wednesday at his Oakland, N.J., office, had little to say on the possible deal.

``The whole issue is in the hands of the bankruptcy court right now,'' he said. ``I'm not sure if it would be appropriate or prudent for me to comment.''

Berrie has been reorganizing lately, announcing Tuesday that it would lay off 75 of its workers in the hope of saving $7.5 million in future costs. It also hired a new executive vice president of sales and announced its North American division president and chief administrative officer were leaving.

News of the proposed sale came as a surprise to industry observers. The two companies had been intense competitors in the late 1980s and early 1990s, when Applause was a far more powerful company.

``It's got to be for trade reasons, because Applause has a strong name at gift stores,'' said Jim Silver, publisher of Toy Wishes magazine. ``It has distribution in a lot of gift stores and I'd guess the strategy is to take the name to get more shelf space.''

But with Russ Berrie already a leader in the plush world, the addition of a similar brand struck Maria Weiskott, editor in chief of Playthings Magazine, as an unusual fit. She said the company had been pursuing the mass market more heavily, which the once upscale Applause didn't fit into.

``It's just the name, and Russ Berrie has a strong name already,'' she noted. ``So I don't see where Applause will bring anything to the party.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com