Modell’s Files For Bankruptcy, Plans To Liquidate
Modell’s Sporting Goods filed for Chapter 11 bankruptcy protection in New Jersey.
The family-owned retail chain will begin liquidation sales in all stores and plans to continue its online sales during the process.
Fourth-generation Owner Mitchell Modell had tried to line up support with its stakeholders to keep the chain out of court, including vendors and lenders, but ultimately fell short. The company decided that if it was unable to find a buyer by 12:30 p.m. Tuesday, it would file bankruptcy and begin liquidating, Modell’s said in court papers.
The company’s lenders and long-standing partners will provide the Company with the financial flexibility to operate the business in the near term, including the timely payment of employee wages and benefits, continued provision of customer orders and shipments and other obligations as they come due going forward. Modell’s stores will initiate store closing liquidation sales of sporting goods equipment, footwear, team apparel and active apparel in all stores and will continue its online sales during the process.
The retailer, in partnership with Tiger Capital Group, will initiate store-closing liquidation sales beginning March 13.
“Over the past year, we evaluated several options to restructure our business to allow us to maintain our current operations. While we achieved some success, in partnership with our landlords and vendors, it was not enough to avoid a bankruptcy filing amid an extremely challenging environment for retailers,” Modell said in a statement. “We are extremely appreciative of the support that our lenders (JP Morgan Chase and Wells Fargo), vendors and landlords provided during this difficult period, engaging in extensive renegotiation efforts and allowing us to pursue every possible avenue to preserve the jobs of our loyal associates. I want to thank each and every one of our associates for their support over the years and our customers for their historic support of Modell’s. This is certainly not the outcome I wanted, and it is one of the most difficult days of my life. But I believe liquidation provides the greatest recovery for our creditors. We have partnered with Tiger Capital Group to liquidate the remaining stores beginning Friday morning, March 13. The return from the liquidation of the first 19 stores managed by Tiger has been beyond spectacular, and we are confident this performance will continue across the remaining stores, maximizing return for our creditors.”
Modell’s has been engaged in discussions with its financial creditors and has been exploring a recapitalization of the business through a potential sale of some or all of its assets or an equity investment. The Company will continue to pursue these discussions.
Robert Duffy, managing director, BRG, has been named chief restructuring officer of the Company. RBC Capital Markets is acting as investment banker for the Company. BRG is also acting as the Company’s restructuring advisor, Cole Schotz is the Company’s legal counsel, and A&G Realty Partners is marketing the store leases.
In February, Modell’s said it would close some stores and was considering offering a minority stake in the company as it looked at various options to keep afloat.
Modell’s operates 153 stores located in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia, and Washington, D.C..