BY Richard Summerfield
Modell’s Sporting Goods has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of New Jersey.
The company, which was founded in 1889, operated over 140 stores across several north-eastern and mid-Atlantic US states and had 3623 employees at the time of the filing.
Modell’s had been in a state of financial distress for some time. In February, the company’s chief executive, Mitchell Modell, announced he was seeking an investor to take a minority stake in the business, calling it “crowdsourcing at the highest level”. However, these efforts were unsuccessful.
In a statement announcing the filing, Modell’s explained it was engaged in discussions with its financial creditors and had been exploring a recapitalisation 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, it noted in a statement, though it has started to liquidate its remaining stores, having liquidated 19 stores prior to the filing.
“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,” said Mr Modell. “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,” he continued. “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.”
News: Modell’s Sporting Goods Voluntarily Files for Chapter 11 Bankruptcy Protection