Lemme guess, trying to make their own Pokemon?
More like Yu-Gi-Oh!, honestly. The problem is they had a strong start, and the card game had been building, and the show itself was also doing really well. Unfortunately, Al Kahn invested in way too much money and reportedly had the market flooded with product, instead of letting it naturally grow, releasing over time. It's the same thing that Level 5 has a very nasty habit of doing and often killing their projects as a result.
Either way, there was too much there, too much coming out, and ultimately, people who were supporting the show didn't know what to do with this and likely stopped buying. This left 4Kids reportedly with a huge deficit. They might've been able to recover from this, but then TV Tokyo/ADK tried to revoke 4Kids rights, which 4Kids sued and TV Tokyo/ADK counter-sued.
The messed up thing about the lawsuit? 4Kids only won on a technicality, as if TV Tokyo and ADK had filed the proper paper work through the courts, they would've been allowed to revoke the license (given even the Judge agreed their was merit to their claims, just ultimately the case came down to if contract termination was valid). Either way, 4Kids didn't have enough money to operate, and really, hadn't the thing with Chaotic happened, I suspect they would've been fine going forward after this. Whether or not Japanese licensors would've been willing to work with them, however, is another issue in itself.
So really was a bit of a column a and column b.
They ultimately sold off their production unit/office space to Konami, along with Yu-Gi-Oh!, and Saban got the rights to the block, some of their licenses (many which have expired and/or are now owned by Hasbro) after both parties agreed to enter a joint bid. 4Kids themselves got sold into another company, and then eventually was liquidated years later. The 4Kids Productions unit was converted to the 4K Media offices (which had been located in California prior to the whole lawsuit), before being renamed to Konamo Cross Media NY.
That's really where it stands.