A Florida real estate and hotel developer with a background in the garment industry became the surprising winning bidder in a bankruptcy auction for Active Ride Shop, beating out Zumiez and three other bids in the process. Issa Ladha's Lifestyle USAs bid of $5.2 million consisted of $1 million in cash and the assumption of $4.2 million in debt.
Garrick Hollander, a lawyer for Active Ride Shop, said Ladha's group plans to buy 20 of the company's 21 Southern California locations, although the number could be fewerdepending on lease negotiations. The sale, which also includes the retailers Mira Loma headquarters, its warehouse, its e-commerce and catalog operations, customer lists and trademarks, is expected to be completed by the end of the month.
In the 1970s, Ladha owned wholesale garment companies that sold to retailers such as JC Penney and Kmart and also operated a number of stores under the Rani's banner, according to court papers. One Rani's location in Cocunut Grove, FL – now operated by a nephew – remains open. In 1978, he started to diversify into real estate and hotels and today operates single-tenant stores such as Walgreens, Blockbusters and Pier 1 Imports. He also built a number of hotels and multiple strip shopping centers in Florida.
Ladha said in court papers that he intends to bring in Esmail Mawjee – who worked with him for 14 years during his time in the apparel business – to oversee the Active business. Hollander also said Ladha has indicated that he plans to retain John Wallace, CEO and founder of Active Ride Shop, and his son, Shane, the company's president, to continue to run the business.
“He's going to put a substantial amount of cash in to capitalize the business, but the Wallaces are going to run the daily operations,” said Hollander. “He indicated that retaining them would be very critical to building a successful operation going forward.”
Other bidders at the auction were Zumiez, which had earlier said it would bid up to $7.2 million, but Hollander said the Zumiez bid included several contingencies. The remaining three bidders were Nine Star, which operates two skate and surf stores in Los Angeles and Mission Viejo; BC Surf & Sport, which has 16 stores in Colorado, Georgia, Florida, Nebraska, Utah and Washington; and Meleen and Company, an Orange County investment firm.
Adrenalina Inc., which has made overtures to acquire Pacific Sunwear and West 49, was among those eying a possible acquisition earlier in the case but never made a formal bid, according to Hallander. Ladha met Adrenalina's CEO Ilia Lekach six months ago and the two share a lawyer but Lekach isn't involved in the acquisition.
Active Ride Shop, founded in 1989, filed for bankruptcy protection on March 22, blaming over-aggressive expansion along with the sharp downturn in the economy. It has closed eight stores since the start of the year. Sales in its most recent year were $60 million.
In its bankruptcy court documents, Active previously said it owes secured creditors $4.7 million and unsecured creditors $15.2 million.
The court must still approve the final sale, and a hearing is scheduled for June 26 to address the sale issue.
