Sports Authority is looking to liquidate and close the majority of its stores by the close of July instead of by the end of August, according to a report in the Wall Street Journal.
The report noted that the retailer is now advertising “last days” of liquidation at its stores. It was based on interviews with multiple store employees and managers. Store managers were summoned to a conference call last week The report notes that the move comes after the retailer paid off its most-secured lenders Friday with proceeds its initial round of going-out-of-business sales.
Sports Authority filed for Chapter 11 bankruptcy in March, moving to close about one fourth of its 463 stores. Failing to reorganize, however, Sports Authority chose in early May to liquidate instead. Going-out-of-business sales at its remaining 320 stores have been taking place since Memorial Day and were scheduled to be completed by the end of August.
The move comes after Sports Authority negotiated a deal the prior week with lenders that allowed its liquidation sale process to continue. According to bankruptcy court documents, going-out-of-business (GOB) sales would have ended Friday without the agreement. The agreement still has to be approved by bankruptcy court at a hearing set for August.
Under the agreement, pre-petition lenders will take $71 million of the $240 million they claim they’re owed. The deal will provide Sports Authority access to cash to cover liquidation and ongoing administrative costs. This includes payment in full for vendors that shipped goods after the early March Chapter 11 filing as well as fees to bankruptcy professionals. Landlords will receive 85 percent payment for owed rent for March that has long been in dispute.
According to the Journal, junior creditors weren’t part of the deal and they have charged that said the settlement shortchanges suppliers.
