Gander Mountain Co., as expected, filed for bankruptcy in U.S. Bankruptcy Court for the District of Minnesota. The hunt & fish specialist plans to close 32 of its approximately 160 stores in coming weeks but is in active discussions with a number of parties interested in a going-concern sale.

In a statement, the company said it expects to solicit bids prior to a bankruptcy auction to be held in late April 2017.

“Today’s action is the result of an in-depth review of the company’s strategic options undertaken in recent months to preserve the value of the company and position it for long-term success,” said Gander Mountain in a statement. “Like many retailers, Gander Mountain experienced challenging traffic patterns and shifts in consumer demand resulting from increased direct-to-customer sales by key vendors and accelerated growth of e-commerce. Despite aggressive actions to improve the efficiency of the company’s retail operations and support functions, the underlying financial impact from underperforming stores and unproductive, excess inventory hampered efforts to create a sustainable path forward.”

The company said its strategic review yielded the following conclusions:

  • A narrowly focused and lower cost operating model is necessary to position the company for profitable growth;
  • The company does not have the financial capacity or time to reset its operations to fully implement the new model and, as a result;
  • The best available path forward is to sell the company on a going-concern basis. voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code.

The company, which also owns Overton’s, said it has obtained a committed debtor-in-possession (DIP) financing facility underwritten by Wells Fargo to support the bankruptcy process. Subject to court approval, the DIP financing, combined with cash from operations, is expected to provide sufficient liquidity to support the company’s continuing business operations and to minimize any disruption during the reorganization process.

The statement said, “The court’s protections will enable us to manage the sale process on an expedited basis while protecting the interests of our customers, employees and other stakeholders. Gander Mountain is in active discussions with a number of parties interested in a going-concern sale and expects to solicit bids prior to an auction to be held in late April 2017. The company expects to submit the winning bid to the Court for approval in early May and anticipates a closing of the sale by May 15.”

The company said it generally expects to conduct normal business operations during its restructuring. Employee pay will continue, employee benefits will remain in place and retirement accounts are intact and protected. The 32 stores to close will begin a shutdown process in the next several weeks.

The Chapter 11 petition filing listed assets between $500 million and $1 billion and liabilities in the same range.

The list of the top twenty unsecured creditors included Vista Outdoor, owed $15.2 million; Pure Fishing, $4.5 million; Ellett Brothers, $3.0 million; Sigarms, $2.86 million; Remington Arms, $2.63 million; Starcom Worldwide, $2.24 million; Vortex Optics, $2.24 million; Liberty Safe & Security, $2.0 million, Bills Hicks & Co., $1.69 million; 5.11 Inc,; $1.5 million; Sports South, $1.41 million; Benelli USA Corp, $1.22 million; Smith & Wesson, $1.2 million; Under Armour, $1.07 million; Magpul Industries Corp, $1.03 million; Normark, $979,866; Hydro Flask, $871,132; Carhartt, $855,696; and Red Wing, $819,708.

Gander Mountain was taken private in 2010 by Gratco, a holding company controlled by Gander Mountain Chairman and Chief Executive David Pratt, and Holiday Stationstores, a gas-station retail operation controlled by Minnesota’s Erickson family. It has faced challenges managing its heavy debt load while ggressively expanding its store count to more than 160 locations. More than 50 stores have opened in the past five years.

On February 14, Gander Mountain issued a statement indicating that had hired Houlihan Lokey as independent advisors as part of a review process that followed a report from Reuters the previous day indicating that Gander Mountain was “preparing to file for bankruptcy as early as this month.”

Noting that its statement was due to “recent speculative news articles,” Gander Mountain didn’t address any of the debt of operational challenges described in the Reuters article other than to state, “Like most retailers, we are subject to normal economic cycles, changes in our industry and shifts in consumer demand that require us to adapt our business accordingly.”

As of March 10, Gander Mountain employed approximately 6,650. Of those, approximately 2,690 are full-time and
approximately 3,960 are part-time. The majority work in the company’s approximately 160 stores located in 27 states. Some work at its main headquarters in St. Paul, MN, Overton’s headquarters in Greenville, NC, and its distribution centers.

Gander Mountain’s advisors in the restructuring are Houlihan Lokey Capital Inc. serving as financial advisor and investment banker, Lighthouse Management Group serving as chief restructuring officer and Fredrikson & Byron, PA serving as legal advisors.

Photo courtesy Gander Mountain