Modell’s Sporting Goods is seeking a three-month extension of the time it has to file its bankruptcy plan due to challenges liquidating merchandise due to the coronavirus pandemic.
The New York-based chain filed for bankruptcy on March 11 with a plan to liquidate inventory through store-closing sales, pay off their lenders by mid-April and use the remaining proceeds from store-closing sales to wind down operations and provide distribution to creditors. A few days after filing, state and local orders forced Modell’s to cease conducting store closing sales and “mothball their operations,” Robert Duffy, chief restructuring officer for the case, wrote in court documents.
The Chapter 11 case was first suspended until April 30 then suspended again until May 31 and once more until June 15 due to continued store closings.
Duffy said that on June 12 the Bankruptcy Court in Newark, NJ approved a budget to support the bankruptcy proceedings through the week ending August 29 to restart bankruptcy proceedings.
According to the court documents, Modell’s anticipated opening 60 stores in New Jersey, Pennsylvania, Massachusetts, Connecticut, and Delaware on June 15 and opening an additional 27 stores on Long Island and Mid-Hudson Valley on June 18. The remaining stores are expected to open once state and local laws allow. The company had 153 stores when it filed for bankruptcy.
In asking for the extension, Duffy wrote, “Although the Chapter 11 cases are three months old chronologically, the debtors have been operational for less than two weeks since the inception of the cases.”
The motion seeks to extend the Exclusive Filing Period by 120 days through and including November 6 and the Exclusive Solicitation Period by 115 days through and including December 31.
Duffy wrote, “The debtors submit that ’cause’ exists to grant the relief requested because (a) the cases are large and complex, (b) the debtors require additional time to negotiate and prepare adequate information, (c) the debtors have made good-faith progress, (d) the debtors are current on post-petition obligations, as modified by the various orders set forth above, (f) the debtors have made progress negotiating with creditors, and (g) the Chapter 11 Cases have not been pending for a long time and were dormant for much of the time that they were pending.”
Photo courtesy Modell’s