DIC Entertainment and McDonald’s have launched a lawsuit to recover money owed to the companies by Cornerstone Overseas Investment Ltd., a related company of China Retail Management Limited, the master toy and apparel licensee for McDonald’s McKids line in Asia.

The original licensing agreement between the fast food chain and CRM was signed in 2005. If none of the outstanding debt is recovered by DIC, it could impact the company’s EBITDA to the tune of US$3.9 million.

DIC is the global consumer products agent for McDonald’s and announced its plans to pursue legal action on August 2. While the suit is still in the preliminary stages, DIC reps estimate that the company could be calling for damages in excess of US$10 million.

DIC intends to provide a further update on the suit with its interim results on September 24, and is currently looking for an alternative licensee for the McKids line.