Sports Authority Files for Chapter 11 Protection
Sports Authority Inc. said it filed for Chapter 11 protection on Wednesday, making it the first major U.S. retailer to file for bankruptcy this year amid fierce competition from giants such as Wal-Mart Stores Inc. and Amazon.com Inc.
The sporting goods retailer said on Wednesday that it expects to have access to up to $595 million in debtor-in-possession financing during its restructuring.
Sports Authority said it had identified about 140 stores and two distribution centers, in Denver and Chicago, that it intends to close or sell as part of its restructuring plan.
The company listed assets worth up to $50,000 and liabilities of between $1 million and $10 million in its filing with the U.S. Bankruptcy Court in Delaware.
Sports Authority was expected to file for bankruptcy after it missed a $20 million coupon payment on Jan. 15, triggering a 30-day grace period to work out a compromise with creditors, Reuters had reported last week.
The retailer said on Wednesday that it had been in talks with its creditors over the past several months for a comprehensive debt restructuring, and was also exploring a recapitalization through the sale of some or all of its assets.
It said it would continue to pursue both options while undergoing restructuring.
"We have received strong interest from third parties interested in investing in or buying some or all of Sports Authority," Chief Executive Michael Foss said.
Englewood, Colo.-based Sports Authority has more than 450 stores and is owned by private equity group Leonard Green & Partners LP, which bought the company in 2006 for $1.3 billion.
The retailer has struggled with an inconsistent operating performance over at least the past four years, according to a research note by Moody's Investors Service, and has been trying to cope with the impact of adverse weather and poor management.
The company's revenue neared $2.7 billion for the 12 months ended May 2, 2015, according to Moody's.
Rothschild Inc. is Sports Authority's financial adviser, FTI Consulting is its restructuring adviser, and Gibson Dunn and Young Conaway Stargatt & Taylor are its legal counsel.
The case number is 16-10527.
(Reporting by Tracy Rucinski and Sruthi Ramakrishnan in Bengaluru; Editing by Savio D'Souza)