LOS ANGELES - MGA Entertainment Inc was given an eleventh-hour reprieve on Tuesday when a US judge ruled it can continue selling its Bratz doll line through the end of 2009, the company's CEO and attorney said.

At a hearing on Tuesday, US District Judge Stephen Larson 'indicated he will be modifying his Dec 3 stay ... to allow purchases and sales (of Bratz items)' beyond a previously set deadline of Feb 11, MGA attorney Tom Nolan said.

MGA had asked judge Larson to postpone his order barring the company from selling products that infringe on Mattel Inc's copyrights for Bratz until MGA can appeal the ruling to the Ninth US Circuit Court of Appeals.

A Mattel representative had no immediate comment.

MGA Chief Executive Isaac Larian described the ruling as 'a good day for MGA, its employees and Bratz'.

In an email, Mr Larian said the company 'will continue to pursue our appeal rights and we are confident that at the end of this bitter litigation, the rights to Bratz will stay with MGA'.

MGA had claimed in court documents that it faced imminent insolvency if the injunction was enforced in February, as retailers canceled spring orders for Bratz merchandise.

Judge Larson's sweeping order requires MGA not only to stop making and selling thousands of Bratz products and to destroy the patterns for the items, but to recall unsold merchandise from retailers.

Mr Nolan said Tuesday's ruling helped the company 'avoid the catastrophic effects of laying off 1,500 employees' as a result of those potential cancellations.

The judge denied as premature a request by MGA to delay enforcing the injunction until the federal appeals court has ruled.

Judge Larson indicated on Tuesday that he will work with the parties to include language in the new order to allay retailers' fears about the ongoing availability of Bratz products, Mr Nolan said.

Judge Larson also set a Jan 5 hearing to rule on whether he should appoint a receiver to monitor MGA's financial dealings at the request of Mattel.

In a motion filed late on Monday, Mattel accused MGA of failing to make timely financial disclosures, of funneling 'millions' of dollars to Larian's family members and of selling Bratz merchandise through a company controlled by Larian.

'At minimum, the receiver should be authorized to investigate and monitor any and all financial and business matters involving Bratz and to report them to the court and to Mattel,' Mattel said in court documents.

Mr Larian called the accusations 'baseless' and 'mud throwing' and said he was prepared to answer them at Monday's hearing.

The case, Carter Bryant v. Mattel, is 04-09049. -- AP