Bankrupt GoLite Seeks DIP Financing to Avoid Liquidation Sale

GoLite, which filed for Chapter 11 bankruptcy last week, filed an emergency motion for debtor in possession (DIP) financing Monday it said was critical to avoiding an outright liquidation of the company that would yield little or nothing for its unsecured creditors. 

The Boulder, CO-based maker of ultra-light camping gear and outdoor apparel applied for DIP financing with GemCap Lending I, LLC, which already has first priority lien and security interest in substantially all of GoLite’s assets, because it has been unable to raise more favorable financing since filing a petition for Chapter 11 bankruptcy Oct. 13. If approved by the bankruptcy court, GoLite would be authorized to pledge its remaining unsecured assets to collateralize new loans of up to $391,000 with GemCap at 18 percent interest. GoLite would then have until Nov. 14 to sell its assets and pay GemCap or risk default on the DIP financing, which would trigger a liquidation of the company.

“The debtor believes that a shut down liquidation is not in the best interest of creditors and significant amounts of going concern value would be lost is such a process,” reads the motion on file with the U.S. Bankruptcy Court in Colorado.

Coupounas LLC, which does business as GoLite LLC, filed its petition for a Chapter 11 bankruptcy Oct. 13, fifteen years after Demetri “Coup” and Kim Coupounas launched the company at the Outdoor Retailer trade show in 1999. After 11 years of selling wholesale, the Coupounases converted to a direct-to-consumer model in January, 2012 and began rapidly opening retail stores. By 2014, GoLite had opened 20 stores and quintupled in size, but had incurred significant losses, according to its bankruptcy petition.

In a motion filed in bankruptcy court Oct. 15, GoLite is seeking approval to reject leases for 13 of the 14 stores it has closed this year, including four in Colorado, three in Utah, two in Oregon and one each in Arizona, California, Idaho and New Mexico.

The company’s Chapter 11 petition lists assets and liabilities of less than $10 million, including nearly $5 million owed its 20 largest unsecured creditors.  GoLite’s top creditor, A Garment (HK) Limited of Hong Kong, is owed $1.34 million. Other creditors include landlords for GoLite stores and six other companies in Hong Kong, South Korea and Taiwan.

Court filings show Demetri and Kim Coupounas own 70 and 20 percent respectively of the company, while the remaining 10 percent is owned by Angelyn Kongures.