MC Sports, the Michigan-based sporting goods chain, filed for Chapter 11 bankruptcy Tuesday. The company is moving to hold liquidation sales at all of its 68 locations, but will use the reorganization to seek a rushed alternative funding or to find a buyer that might keep some stores open.
“After a valiant and concerted effort by MC Sports’ associates, vendors, landlords and outside professionals to restructure the company’s balance sheet and operating performance, the company was unable to reach an agreement on a viable out-of-court proposal,” MC Sports President and CEO Bruce Ullery said in a statement.
“The only alternative to address our immediate liquidity issues is to commence liquidation sales at all stores, while concurrently expediting our pursuit of alternative financing and going-concern sale options.”
The Chapter 11 filing will enable MC Sports “to address a number of legacy costs,” including long-term leases and trade debt that have “hampered the company’s ability to develop a clear path forward.”
According to its court filings, MC Sports has over $14 million in trade debt, including about $3.8 million owed to Nike and $2.4 million to Under Armour. The retailer reported losses of $5.4 million before taxes on sales of $174.6 million in 2016.
“Like many retailers in the sporting goods industry, the company has faced increased competition, the blurring of distribution channels by key athletic and outdoor brands, increasing direct to consumer sales by key vendors, and the market disruption and growth of e-commerce,” the company said in its statement. “In response to these headwinds, the company has been systematically moving to larger format stores that combine hunting, fishing and outdoor categories with traditional sports gear, footwear, and apparel/ In addition, it has worked diligently to shed poor performing locations as lease opportunities became available.”
MC Sports said it has retained Stout Risius Ross Advisors, LLC, to lead the company through an exploration of “alternative options.”
MC Sports, founded in 1946 and based in Grand Rapids, operates 68 stores in seven states.
Image courtesy MC Sports
