Sports Authority Inc. filed for Chapter 11 protection on Wednesday as it faces its growing online competition. The U.S. good retailer is also planning to shut down its weaker stores and search for a buyer for the stores before the end of next month.
According to Reuters, Sports Authority asked for Bankruptcy Court approval to hire liquidators. Court documents also unveiled that it is also deciding whether it should start closing its stores with sales at up to 200 of its 463 locations.
The privately operated sports good retailer also said that it planned to shut down and seek for buyers of its five distribution centers in Denver and in Chicago. "This decision follows a comprehensive review of the Sports Authority store portfolio in light of the increasing amount of shopping that is occurring online," the company expressed in a statement.
The Fiscal Times mentioned that a court filing by Sports Authority's chief financial officer, Jeremy Aguilar, claimed that the non-operational information systems is a problem that made the company decide in filing the bankruptcy. The recurrent turnover in its leadership and a history of mergers were also some of the reasons to blame in the company's bankruptcy.
Just last year, retailers, including the retailer, Wet Seal Inc, and electronics chain, RadioShack Corp, have declared their bankruptcy to close their underperforming chains. But Sports Authority also said that it expected to have access to more than $595 million in debtor-in-process financing during its restructuring phase. It also noted that the court documents claimed that the loan was necessary to reassure the vendors so they won't withdraw their support after the chain did not pay them an interest in January.
USA TODAY reported that, even though filing the bankruptcy protection frequently offers companies a chance after the declaration of bankruptcy of the Englewood, Colorado-based Sports Authority, the survival of its other chains is still not guaranteed. The company also said it would plan on either pursuing comprehensive debt-restructuring plan and a sale of all or a few of its assets.
Meanwhile, in the court filing, Aguilar admitted that Sports Authority had assets of $1.3 billion and liabilities of $1.1 billion. Sports Authority also did not disclose any information regarding some potential buyers of their chains in Denver and Colorado.
