The company entered Chapter 11 bankruptcy protection in 2000, and in 2001 Pleasant Rowland, founder of American Girl, purchased the bankrupt MacKenzie-Childs. In 2005, the company laid off several workers, including founders, Victoria & Richard MacKenzie-Childs. After Rowland restructured her management team in 2006 MacKenzie-Childs became profitable. In 2008 Rowland sold MacKenzie-Childs to Lee Feldman and Howard Cohen, part owners of Twin Lakes Capital.
MacKenzie-Childs sued founders Victoria and Richard MacKenzie-Childs citing trademark violation, as their last name and trademarks referencing it had been sold off in bankruptcy proceedings.