Vann’s Inc. is seeking to divest, or liquidate its inventory of outdoor apparel and gear, according to a Chapter 11 petition filed by the Montana retailer  Aug, 5, the last day of the Outdoor Retailer Winter Market.

In the petition, Vann’s new CEO attributed the company recent financial problems to its decision to diversify away from selling home appliances and electronics by starting up a home building venture and, which specializing in outdoor apparel and gear.

“Vann’s has suffered losses as a result of expanding beyond its core business of selling quality appliances and consumer electronics through its online and retail locations, on which its reputation and customer relationships were built,” reads an affadavit filed by Vann’s CEO Gerald McConnell, who was brought in to rescue the company in mid-June. “For example, in 2010, Vann’s expanded into the business of selling outdoor and recreational clothing and gear at This endeavor diverted the investment of financial and staff resources at a critical time for the core business and did not take advantage of Vann’s experience or reputation in its traditional product line.”

In its bankruptcy petition, Vann’s listed $17.6 million in assets and $14.4 million in liabilities. No outdoor vendors appear on its list of 20 largest creditors, but the company paid out nearly $400,000 to outdoor vendors in the three quarter ended July 31. It largest outdoor product suppliers appear to be Columbia Sportswear, Marmot Mountain LLC, Mountain Hardwear and Outdoor Research. Vann’s, which is owned by an ESOP,  generated $100.8 million in sales in 2011 and $45.4 million year-to-date through Aug. 5, according to its bankruptcy filing. Most of that came from the sale of home appliance and electronics from five brick-and-mortar Vann’s stores, and two online stores.

In his affidavit, McConnell said he quickly learned that Vann’s comingled inventory and funds between its legacy appliance business and its new online ventures, including 

“It became clear that Vann’s and the Subsidiaries operated as a single business and that, despite instances where contracts may have been signed by Subsidiaries, Vann’s stakeholders ultimately were relying on the credit of Vann’s,” reads the affidavit. “In order to align the companies’ corporate structure with reality, on July 26, 2012, each of the Subsidiaries was merged into Vann’s and ceased to exist as separate entities.”

Within days of hiring McConnell, Vann’s received a letter from GE Finance informing the retailer of its intent to terminate its line of credit effective July 19. GE Finance declared the company in default July 30 and Vann’s is working with its other major lender, FIB, to arrange debtor in possession financing.