The 11-store chain submitted its petition for Chapter 11 protection on Friday in the U.S. Bankruptcy Court for the District of Maryland.
The company lists the estimated value of its assets at between $500,000 to $1 million — while its liabilities are estimated to total between $1 million and $10 million.
Nike — a brand that has shown up atop the lists of creditors with the largest unsecured claims on many a bankruptcy filing this year, including West-Coast based retailer Shiekh Shoes last month — tops the list of those owed big bucks by Sports Zone.
The athletic giant is owed $1.9 million by the now bankrupt retailer. Adidas is second on the list — but is owed significantly less at $299,833. New Balance rounds out the top three creditors with an owed balance of $192,506.
According to court documents, Nike is also owed a whopping $16 million by Shiekh Shoes. But, its unsecured claim with Sports Zone could be more complicated.
In its filing, Sports Zone recounted falling behind on payments to Nike, one of its largest suppliers, earlier in the year. The retailer said in February it issued a promissory note for $3.7 million to Nike and made monthly payments of $330,000 per month shortly thereafter. Sports Elite said Nike in September filed a notice with the Virginia State Corporation Commission — in an attempt “to perfect its security agreement” with Sports Zone.
In response, Sports Zone said it intends to file an adversary complaint against Nike in order to avoid any security interest it may have.
Sports Zone Elite’s bankruptcy comes at a time when a slew of retailers are going belly up amid the rapid growth of digital and consumer shifts to experiential spending.
Larger national players Payless ShoeSource, Wet Seal, BCBG Max Azria Group, The Limited and several others also flocked to bankruptcy court this year along with regional sellers such as The Tannery, Shiekh Shoes and Luke’s Locker. (Payless ShoeSource successfully emerged from bankruptcy in August, just four months after filing its petition.)
Sports Zone said it has an agreement to sell its remaining assets to Halifax of Palisade LLC, a New Jersey-based apparel wholesaler.