Less than a day after filing for Chapter 11 bankruptcy, Copeland Sports announced ownership and management changes, along with a new financing agreement, in conjunction with the filing of a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
The company operates 31 Copeland Sports stores in California, Oregon, Nevada and Utah. It was founded in 1971 by Tom and Jim Copeland of San Luis Obispo, who managed the company for over 30 years before the purchase of the company in 2002 by a private equity firm.
Tom, Jim and Mike Copeland have just reacquired ownership of the company, and will resume an active management role. Copeland Sports has also named a new chief executive officer, Barry Soosman, who was formerly an executive vice-president of Guitar Center, Inc., with expertise in specialty retailing.
Copeland Sports filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code on August 14, 2006, in Wilmington, Delaware. At the same time, Copeland Sports announced that it had reached agreement with Wells Fargo Retail Finance, LLC on a $25 million debtor-in-possession credit facility. The Copeland family will make an additional secured loan to the company of $5 million, to pay down the Wells Fargo secured claim and increase borrowing availability under the credit facility. Copeland Sports believes that the credit facility, along with funds generated by operations, is sufficient to meet its capital requirements.
Chapter 11 allows a company to continue operating its business while it restructures. Copeland Sports intends to immediately close several stores that are underperforming or are situated in overlapping markets, to focus on its profitable core operations. “We believe that with the right approach and our knowledge of the company and the sporting goods industry, we can put the company back on a sound footing and come out of Chapter 11 quickly,” said Tom Copeland.
In addition to lending the company $5 million, the Copeland family has agreed to voluntarily subordinate their lien rights as holders of over $13 million in Senior Subordinated Notes, for the benefit of vendors who agree to supply goods and services to Copeland Sports on ordinary credit terms. This commitment is intended to encourage suppliers to help restock Copeland Sports for the back-to-school and upcoming holiday seasons.
“Copeland Sports has always enjoyed strong relationships with our suppliers, and want to make sure they know they can continue to do business with the company,” Copeland said. “We built this business, and we intend to do everything possible to keep the confidence of our customers and creditors.”
