Valley Sporting Goods, a 65-year-old store based in Modesto, CA, has filed for bankruptcy protection so it can restructure its debts and downsize its business.
The current owners, Darren Daily and his wife, Crystal, paid more than $1.5 million for the store in August 2007, when the local economy was strong and commercial business prices were relatively high, according to the Modesto Bee.
“We had a great first year,” Daily recalled. Then the recession hit, and his store’s sales plummeted more than 50 percent. It is in the third year of declining revenues. “We simply cannot sustain this slide.”
Bankruptcy Court documents show Valley Sporting Goods has less than $500,000 in assets and more than $1 million in debts. Its creditors list includes the company that manages McHenry Village, numerous sporting good suppliers, the bank that financed its purchase loan, the Internal Revenue Service, California’s Franchise Tax Board, the State Board of Equalization, the Employment Development Department and the Stanislaus County Tax Collector.
“Were going to look at all our options to find a responsible way to control our old debt so we can move forward,” said Daily.
One factor that will make it increasingly difficult of Valley and other sporting goods retailers in the Central Valley is the growth of Dicks Sporting Goods. DSG has already opened a store in Bakersfield, Fresno and Modesto, and has clear plans to move dominate the Valley.
On its website, Valley Sporting Goods left a note on the opening page:
“Curious about us filing for Chapter 11? Dont worry, were not going anywhere. Chapter 11 is a way for us to make structured payments to our creditors. Our doors stay open and nothing changes on the surface. However, our expenses become simpler and, in our case, cheaper and more manageable. What does this ultimately mean? More of the money you spend with us goes towards getting in products that you love. From now on, expect to see more product, more services, a bigger web presence, and a stronger relationship to the community. We have a lot of plans for the future. So come on in and show us some support, youll be glad you did. “
On a side note to the filing, the Bankruptcy Court has filed a notice of an incomplete filing in the Valley case. The notice gives the Debtor until June 27, 2011 to file all outstanding documents or face dismissal of the case.