HatStop, a family-owned fanwear chain based in Tacoma, WA, filed for Chapter 11 bankruptcy protection to reorganize its business and continue operating. The company blamed the filing on over-expansion and a rapid slowdown in sales as the COVID pandemic subsided.
The filing in U.S. Bankruptcy Court in the Western District of Washington listed assets of $48,543 and liabilities of $625,599.
In an affidavit from Miguel Estupinan, who operates HatStop in a general partnership with his brother, Alan, said that the retailer began operations in 2012 as a family-run business selling hats and licensed sports apparel at the Starlight Swap Meet in Lakewood, WA. Over time, the business was conducted under various assumed names, including BoldBrims by HatStop, Fanzone by HatStop and Hat Stop Seattle Team Store.
In 2015, HatStop opened its first permanent retail store at The Commons at Federal Way, WA., subsequently adding a second store in 2020 in Westfield Southcenter Mall in Tukwila, WA, and later stores in Auburn, Puyallup and Kent, WA, respectively. The Puyallup store was the company’s largest location.
The openings came as HatStop from 2020 through 2023, including during and after the pandemic, “experienced unusually strong sales due to increased consumer demand for hats and licensed sports merchandise,” with 2023 marking the strongest year in the retailer’s history.
Beginning in early 2024, “consumer demand declined sharply,” with sales dropping by nearly half over a short period of time, particularly at the Auburn and Puyallup locations. Estupinan said, “Those stores were unable to cover rent and operating expenses and required subsidization from stronger locations.”
To fund operations during this period, HatStop relied on merchant cash advance products, financing from Square Financial Services, based in Salt Lake City, UT, bank credit lines, and other short-term working capital arrangements. The challenging period was supported by extended credit from its largest supplier, New Era.
Estupinan wrote, “At peak stress, the partnership was servicing approximately $7,400 per week in merchant financing obligations, in addition to rent, payroll and vendor expenses. The partnership’s primary merchandise supplier, New Era, extended trade credit of up to approximately $100,000 per month. As sales declined, the partnership was unable to sustain weekly payments of approximately $20,000, resulting in a substantial balance that was ultimately resolved through a negotiated repayment plan, which has now been completed.”
The Auburn and Puyallup locations “proved unsustainable” despite renegotiated lease terms. Estupinan wrote, “Landlords insisted on enforcing long-term leases and related guaranty obligations.”
HatStop vacated the Puyallup location in September 2025, “incurring substantial unrecoverable build-out and exit costs.”
The landlord of the Puyallup location, The Cafaro Northwest Partnership, commenced litigation against Miguel Estupinan in Trumbull County, OH, over leasehold charges, and the Ohio court ruled in favor of the landlord on December 19. The judgment against Estupinan was for a principal amount of $186,431, together with interest at 18 percent per annum accruing from October 1, 2025, and court costs incurred in the action.
The Auburn location was closed previously, while the Kent location closed in late December 2025. HatStop continues to operate two stores at The Commons at Federal Way and Westfield Southcenter Mall, “both of which have historically been profitable and remain viable operating locations,” stated Estupinan.
He added, “Sales have stabilized at approximately $30,000–$35,000 per week across the remaining locations, though margins remain tight and vendor credit is limited.”
HatStop intends to assume the leases for the Federal Way and Southcenter locations as part of the Chapter 11 case.
On January 6, Finvest LLC also filed a lawsuit seeking to enforce obligations arising from a merchant financing agreement. Finvest’s lawsuit, combined with the Ohio judgment and existing litigation and collection pressure, led HatStop to file for bankruptcy protection.
Estupinan said the unsecured debt in the case totaled in the range of $450,000 to $500,000, exclusive of contingent and unliquidated lease-rejection damages and pending litigation claims.
The bankruptcy is designed to address mounting litigation and collection activity, including the Ohio judgment and Finvest lawsuit, resolve burdensome lease obligations, preserve remaining operations to maximize value for creditors, and provide for the equitable treatment of creditors.
Estupinan wrote, “Without bankruptcy protection, continued litigation pressure and enforcement actions would result in an uncontrolled liquidation and diminished recoveries for all stakeholders.”
HatStop’s unsecured creditors list is mainly composed of financial firms. The top unsecured creditors were Chase; $175,512 under two claims; Finvest LLC, with a claim of $162,801; Square Financial Services, $123,528 under two claims; Kent Station Retail $39,500; American Express, $29,701; RVCA (Boardriders), $16,813; WebBank, $14,177; Southcenter Owner, $8,752; Capital One, $15,294 under two claims; and Red Hawk Fire Protection, $1,807.
According to HatStop’s website, the stores sell sports apparel, throwback jerseys, hats, socks, backpacks, pins for the hats and sport accessories under brands including New Era, Mitchell & Ness, 47 Brand, American Needle, Zephyr, Pro Standard, Adidas, Fanatics, Nike, Starter, Fox, RVCA, Brixton, Metal Mulisha, Hooey, Bioworld, Spin-Em, Groin Bros, Kangol, DC Shoes, Quicksilver, Neff, Zan Headwear, Sprayground, and PSD underwear.
Image courtesy HatStop
