Modell’s Sporting Goods this week pulled the trigger on a Chapter 11 filing after months of attempts to get a handle on financial hardships as it struggled to adjust to a shifting retail climate.
The family-owned sporting goods retailer on Wednesday filed for Chapter 11 protection in U.S. bankruptcy court in New Jersey, citing a challenging retail environment and listing the estimated value of its assets at between $10 million and $50 million, dwarfed by estimated liabilities of $100 million to $500 million.
According to court documents obtained by FN, some of the industry’s biggest players are among the firm’s creditors with the largest unsecured claims. Leading the pack is Adidas USA Inc., which is owed $8.97 million. Nike Inc. follows closely with an unsecured claim of $8.87 million, and Under Armour has an owed balance of $3.86 million.
Other major Modell’s creditors in the athletic space include Hanesbrands and its subsidiary Champion, which are owed a combined $1.72 million, and New Balance, which is due about $756,000.
Modell’s had tried a number of tactics in recent months to stave off bankruptcy, including negotiations with landlords, which yielded some concessions and saved several of its stores that were previously on the chopping block.
“We will do whatever it takes to save these stores and protect the communities that we have served and loved for generations,” CEO Mitchell Modell said in a Fox Business interview last month. “This is not a business, and these are more than associates.”
Amid the company’s struggles, Modell’s chief had considered selling a minority stake to save the family business on top of loaning it $6.7 million last year, and the company recently sold its warehouse in the Bronx to raise more money to keep it afloat.
Ahead of this week’s filing, the 130-year-old chain had managed to rescue seven of the 24 stores it had slated for closure. The retailer had reportedly hired financial advisers following a disappointing performance during the critical holiday shopping season.
Modell’s is among a growing list of sporting goods purveyors that have felt the pressures of an evolving retail environment in recent years. Grand Rapids, Mich.-based MC Sports filed for Chapter 11 protection in 2017; Sports Chalet announced it would close its doors in April 2016; Sports Authority declared bankruptcy in March 2016; and City Sports went out of business in late 2015.
According to court documents, Modell’s continues to operate its businesses and manage its properties as debtors in possession. No trustee, examiner or statutory committee of creditors has been appointed in the case.