Montreal toymaker Mega Brands Inc. has appealed a bankruptcy court in the US to sanction its planned recapitalization vote. The company made a filing under Chapter 15 of the U. S. bankruptcy code to prevent creditors from tying up their U. S. assets.

Mega Brands is trying to boost its capital structure, with a refinancing plan that will shave an estimated $290 million U. S. in debt and about $30 million U. S. in annual interest expenses through new financing and share offerings.

An interim order under the Canadian Business Corporations Act has been issued by the Quebec Superior Court, allowing Mega to proceed with the recapitalization vote.

"We're not doing liquidation. We're not doing reorganization under U. S. laws. We're just seeking U. S. recognition and enforcement of the Canadian proceeding", Mega Brands Chief Financial Officer Peter Ferrante said.

The company's management, led by Chief Executive Marc Bertrand, argues current shareholders will own a stake in a company that will be much stronger financially to implement its strategy.

Mega Brands also scheduling a special meeting of shareholders and debt-holders to vote on the proposed restructuring.