City Sports Inc. filed for Chapter 11 bankruptcy protection on Monday, Oct. 5.
The filing in the U.S. Bankruptcy Court in Wilmington, DE listed assets of $38.6 million and $39.6 million in liabilities. According to court papers, vendors owed about a million include Nike, Under Armour, Asics, Patagonia and The North Face while those owed close to half a million include Brooks, Adidas and New Balance.
In court papers, City Sports said that in recent days several potential purchasers have expressed interest in continuing the operations at the stores. The company is requesting an auction occur by Oct. 19 to capitalize on the interest and because the stores will be forced to liquidate if no sale occurs by Oct. 30 to maximize selling over the upcoming holiday season.
“We have arranged financing for reorganization and intend to emerge from this process a much healthier company, better positioned for long-term success,” said Marty Hanaka, CEO of City Sports, in a statement provided to Sports Executive Weekly.
Timing of the closures and the specific locations has not yet been determined. The company said it will make every effort to offer store associates affected by the closures positions in other stores where possible.
The company said it expects the reorganization process to take one to three months. In the meantime, City Sports will continue to operate its existing 18 retail stores and online business. The company has arranged continued financing that will allow for ordinary business operations to continue uninterrupted during the reorganization process.
“Our stores remain stocked with the same high-quality products, and we will continue to honor gift cards and returns on merchandise purchased prior to the filing,” said Hanaka. “Our team is focused on developing a reorganization plan and running the business during this time of transition.”
City Sports said it was particularly hurt by record-setting levels of snow this past winter in the Northeast although the company also said it had been already struggling in a competitive marketplace.
In April 2014, the company hired FTI Consulting Inc. to help it improve its cost structure. While store hours and the labor force were reduced and freight deliveries slowed, negotiations with landlords around store leases didn’t result in the cost reductions that the retailer needed to stay solvent, leading to the bankruptcy.
According to court documents, the top
unsecured trade creditors include the Nike USA, $1.27 million Under Armour,
$1.04 million; Asics, $1.03 million; Patagonia, $1 million; The North Face,
$968,301; Brooks Sports, $605,095; Adidas America, $482,791; New Balance,
$482,791; and Saucony, $252,350.
Other vendors left with unpaid bills
under $200,000 include ChllyBear, owed $174,091; Warnaco Swimwear, $162,688;
Moving Comfort, $162,507; Mizuno Sports, $162,406; GoPro Inc., $160,411; Wynit
Distribution, $136,870; Converse, $134,179; Wilson Sporting Goods, $130,389;
Reebok, $124,928; TYR Sport, $121,438; and Babolat, $117,434.
Those owed less than $100,000 include Smith Optics, $86,855; Nathan Sports,
$83,084; GoFit, $77,504; and Alternative Apparel, $72,130.