Seven months after emerging, Eastern Mountain Sports (EMS) and Bob’s Stores returned to bankruptcy court in order to complete a sale to Sports Direct International Plc, the U.K.’s largest sporting goods chain.

According to the filing, Sports Direct will become a stalking horse bidder in an upcoming bankruptcy auction. The filing, as well as the discussions with Sports Direct about becoming a stalking horse bidder in the case, were reported last week by Reuters.

According to court documents filed in the U.S. Bankruptcy Court for the District of Delaware, Eastern Outfitters, the parent of EMS and Bob’s Stores, listed assets and liabilities in the range of $100 million to $500 million.

EMS, with 61 locations, is the nation’s second largest specialty outdoor retailers after REI while Bob’s, with 34 locations, offers value-oriented footwear, apparel and work wear with a big fan apparel business. Both focus on the Eastern and Mid-Atlantic regions. Combined, the stores generate annual sales between $350 million to $400 million.

The bankruptcy filing indicates the company has “engaged in substantial negotiations with Sports Direct to serve as a stalking horse in a sale process to be conducted pursuant to section 363 of the bankruptcy code in the Chapter 11 case.” The filing also noted that Sports Direct is also a lender pursuant to the company’s second lien debt and Sports Direct has agreed to provide debtor-in-possession financing “on favorable terms” to support the reorganization.

At press time, court documents don’t give any indication on how much Sports Direct has agreed to bid for Eastern Outfitters assets, how many stores they plan to keep or when the bankruptcy auction is expected to take place. The reason for the filing also wasn’t given, except to support the sale. At the bankruptcy auction, other bidders may emerge.

Sports Direct, with roughly 670 stores across the U.K., is itching to establish a foothold in the U.S. Last June, Sports Direct and Modell’s Sporting Goods were reportedly weighing an 11th-hour bid for up to 200 of Sport Authorities stores leases just before the chain moved to liquidate. Sports Direct also bid for Sports Authority’s intellectual property but lost out to Dick’s Sporting Goods Inc.

According to the Reuters report, sources said Sports Direct “had expressed interest in preserving at least some” of the EMS and Bob’s locations.

Sports Direct also owns a number of athletic brands, including Slazenger, Everlast, Lonsdale, Kangol, Karrimor and LA Gear. The company’s controversial owner is Mike Ashley, who also owns the Newcastle United football squad.

Last April, Vestis Retail Group LLC, then-owner of outdoor retailer EMS, Bob’s and Sport Chalet, filed for bankruptcy and shuttered the Sport Chalet business altogether. In the initial filing, Vestis said it was “burdened by limited financial flexibility due, in part, to the unique competitive pressures facing Sport Chalet.”

At the time, the company also said it was hurt by the shift away from traditional brick-and-mortar retailers and toward online-only stores, increased competition from big-box and specialty sporting goods retailers and liquidation sales that were occurring at some of Sports Authority’s locations. The first filing came a few weeks after the filing of Sports Authority.

Versa has controlled Bob’s Stores since 2008 and Eastern Mountain Sports since 2012. Vestis Retail CEO Mark Walsh returned to hold the same role at Eastern Outfitters. It bought Sport Chalet in 2014. Versa noted that both EMS and Sport Chalet were on the “verge of liquidation” when they bought each.

After closing eight EMS locations and one Bob’s location, EMS and Bob’s was sold to funds advised by Versa Capital Management LLC, the Philadelphia-based private equity firm that owned Vestis and focuses on distressed companies. Acting as the stalking horse bidder in last year’s bankruptcy, Versa held on to EMS and Bob’s Stores in last year’s bankruptcy by paying $1.5 million in cash and by forgiving $35 million in debt and other liabilities. Versa also pledged to pay back about $113.44 million owed to Wells Fargo as part of the deal. Eastern Outfitters emerged in July.

Said Walsh at the time of the exit, “We move forward with a focused strategy and strengthened capital structure that will enable EMS and Bob’s to prosper. The management team and I would like to thank our trade and service partners for their unwavering support and for recognizing the value of our brands and their confidence in our strategic plan. We are excited to begin this new chapter and the growth trajectory we have outlined for our future.”

Subject to bankruptcy court approval, Bracewell LLP as well as Cole Schotz were engaged as legal counsel to Eastern Outfitters in the new case, AlixPartners LLP as turnaround advisor and Kurtzman Carson Consultants as the claims and noticing agent.

Photo courtesy EMS