Big-box chain Sports Authority lost its bid to remain in the retail game without a dramatic restructuring as the company filed for Chapter 11 bankruptcy Tuesday.
The retailer — owned by Los Angeles-based private equity firm Leonard Green & Partners — said it would seek to sell or close about 140 stores, or nearly one-third of its locations, after failing to keep up with consumer trends.
Although bankruptcy often offers companies a second chance at life, Englewood, Colo.-based Sports Authority’s survival is not guaranteed. The company said it would pursue either a comprehensive debt restructuring plan or a sale of all or some of its assets.
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” Sports Authority CEO Michael E. Foss said in a statement. “We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations.”
The company, which filed for bankruptcy in a federal court in Delaware, currently operates 463 stores in 41 states and Puerto Rico. Its top 10 unsecured creditors include Nike, which is owed $47.9 million, and Under Armour, which is owed $23.2 million.
Sports Authority’s private equity owner took the retailer private after acquiring it for $1.3 billion in 2006. In the 1990s, the company was held by Kmart before being spun off.
SOURCE: Nathan Bomey