Eastern Outfitters LLC, the parent of Eastern Mountain Sports (EMS) and Bob’s Stores, won court approval for an expedited hearing on its plan to shutter 48 of its 86 stores.
The company plans to close 27 EMS and 21 Bob’s Stores locations. The company has not closed any stores since its most recent filing. When it filed for bankruptcy in early February, it had 51 EMS locations and 35 Bob’s Stores locations.
The closings would leave EMS with 24 locations and Bob’s Stores with 14. When Versa Capital Management, which owns both chains, acquired EMS in 2012, it had 69 locations. Bob’s Stores had 34 locations when it was acquired in 2008.
In a separate bankruptcy filing last year, eight EMS locations and one Bob’s location were closed.
Eastern Outfitters will make its case for an order approving the plan on April 13 in U.S. Bankruptcy Court for the District of Delaware.
The move comes as the company’s sale to Sports Direct, the U.K. sporting goods giant, appears to be proceeding smoothly. In a court filing regarding the latest round of closings, Eastern Outfitters said the company has “been working on analyzing the performance, sales and profitability of all of the debtors’ retail locations. Sports Direct has identified certain locations that do not make economic sense to operate, particularly if the debtors are unable to get better terms on some of their leases.”
At the same time that Eastern Outfitters filed for bankruptcy on February 6, Sports Direct committed to serve as the stalking horse bidder for its assets at a bankruptcy auction. Sports Direct also agreed to purchase second lien debt from Versa, which had acquired the company out of bankruptcy proceedings last year, as well as to fund the bankruptcy financing the chapter 11 case.
Amid objections from unsecured creditors over Sports Direct’s agreement, including a $3.5 million break-up fee if its offer was surpassed in a bankruptcy auction, Eastern Outfitters in late March agreed to negotiate a private sale to Sports Direct and skip the auction. As part of the agreement, Sports Direct will cover severance claims for unpaid rent and not get rights to avoidance actions.
In filing for bankruptcy, Eastern Outfitters said a last-minute agreement to have Sports Direct acquire substantially all the business was the only deal available to avert an all-out liquidation.
Photo courtesy Eastern Mountain Sports
