You have until noon today to get in your own bid for the assets of the Footaction chain after a the U.S. Bankruptcy Court judge gave his blessings to Footstars plan to liquidate the now 353 store chain. The field appears to be a bit narrower than many had thought, considering Footstars statement they had more than 10 suitors in line prior to their Chapter 11 bankruptcy filing. The auction is expected to take place on April 16 and the final sale hearing will be held April 21.
Based on the recent experience with the Bobs Stores bankruptcy, anything can happen between now and the sales hearing date. A group led by Dicks Sporting Goods actually won the bidding process and was designated as such, but final arguments before the BK judge resulted in TJX Corp., parent of TJ Maxx and Marshalls, emerging as the ultimate victor in that case.
Expect certain fine points to be argued here as well as the Court hears arguments over splitting up the chain into pieces to maximize the price paid against bids that are structured to keep the chain intact, its banner still flying, and its employees still maintaining their jobs.
So far, there are reports that The Finish Line and Foot Locker, as expected, are both in the fray and are up against at least one financial player. The two former CEOs, Ralph Parks and Shawn Neville, have had their names attached to a number of rumors running around the industry, and current Footstar CEO Dale Hilpert or former Footstar Direct president Harry Colcord could figure in as well, according to industry observers.
There is no doubt the private equity folks would be lining up management teams that could best return the business to its former fast track growth — and that will take the blessing of Nike. The brand will figure prominently in the process here as the private equity players look for assurances that the emerging company would see marquee product flowing at historical rates. Without a team in place to ensure such an agreement, this is not an easy bid to make.
The debate rages on whether Finish Line or Foot Locker would attempt to pick up the business in whole or in parts, with the latter more capable of running it as another subsidiary business and the former looking to pick up key locations to accelerate its current growth.
One of the keys here will be the total investment required by an entity to acquire and run the business.
Anyone buying the whole enchilada - or at least a great majority of it — would have less net cost at start-up that anyone looking to do a nameplate change. That would seem to favor the guys looking to run Footaction as a going concern again as their bids could conceivably be higher that someone that has to think about new employees, changing formats, changing signage, and the marketing required to convert consumers.
On the other side, a bid that comes in that keeps all current employees in place, the stores intact, management in place, Nike happy, and just maybe has a side agreement with Footstar on back-end services and logistics that enables that company to emerge from Chapter 11 a stronger player, would be a most interesting proposition for the judge to consider.
>>> Just food for thought as we sit back, make popcorn, and watch our own little reality television show unfold before our eyes. I wonder what The Donald would do
