A federal judge could rule Tuesday (Jan. 21) on whether to schedule an auction to sell off the bulk of the assets of bankrupt specialty outdoor retailer Altrec Inc.
The Redmond, OR retailer filed a Chapter 11 bankruptcy petition Jan. 6 as part of a restructuring plan aimed at selling the company as a going concern. Remington Outdoor Corp. has already agreed to lend up to $1 million to Altrec to keep it operating for up to nine more weeks.
Altrec generated a net loss of approximately $5.1 million on revenue of $20.1 million in the 11 months ended Nov. 31, 2013, according to its bankruptcy petition. In early December, a receiver appointed by a state court valued Altrec’s assets at $5.7 million and its liabilities at $24.2 million. The receiver, however, estimated the liquidation value of those assets at just $1.2 million.
|Altrec's largest trade creditors
The Burton Corp……$520,585.60
The North Face…….$508,505.50
The Timberland Co….$270,667.00
According to court documents, Altrec financial problems began in December, 2011, when its site was hit by a denial-of-service attack that cost it valuable sales during the peak holiday shopping season. That set off a series of events that caused sales to plunge over the next two years. In 2013, a commercial lender terminated a $7.5 million working capital facility to the retailer, triggering another sharp decline in sales, according to Altrec’s bankruptcy filings.
Altrec CEO Mike Morford spent much of 2013 seeking investors for the company, but Altrec defaulted Sept. 30, 2013 on a $3.5 million bridge loan, according to court records. On Dec. 12, those lenders placed the company in receivership in Oregon state court and hired Clyde A. Hamstreet & Associates LLC as Altrec’s chief restructuring officer. The turnaround firm quickly concluded that, while Altrec had a history of substantial operating losses, it could fetch creditors more as a growing concern than if sold off in parts.
On Dec. 23, creditors and Altrec accepted a proposal from Remington Outdoor Co., under which Remington would lend up to $1 million to keep Altrec going for up to nine weeks. In exchange, Remington was granted priority liens on some Altrec assets as a stalking horse bidder. Although best known as the nation’s largest firearms manufacturer, Remington has been diversifying in to higher margin softgoods in recent years, including Mountain Khakis.
On Jan. 21, a federal bankruptcy judge will rule on whether and when to schedule an auction to sell substantially all of Altrec’s assets.