Bankrupt Sports Authority Owes $71M to Nike and Under Armour

by San Antonio Attorney

Sports Authority filed for Chapter 11 bankruptcy in a federal court in Delaware and currently employs 13,000 employees in 40 states.

Nike and Under Armour are one of the top 10 unsecured creditors of Sports Authority.  The sports retail store owes $47.9 million to Nike and $23.2 million to Under Armour.

The company stated that the gift cards purchased by customers can still be used.  However, most bankruptcy experts advise that these gift cards should be spent right away as these things can be useless once Sports Authority undergoes conversion to its restructure into an all-out liquidation process.

Sports Authority, a sports retail store that runs a series of branches all over the country, finally lost the game in retaining their business without any process of restructuring.  The company filed for Chapter 11 bankruptcy last Tuesday and will initiate closure of more than 140 stores.

Sports Authority is owned by Leonard Green & Partners, a private equity firm based in Los Angeles.

Online retailers were the main cause to Sport Authority’s financial problems.  A huge debt worth $1.1 billion in debt, lagging behind consumer trends and decline popularity of golf were cited as the precipitating factors.

The company’s filing for bankruptcy may still offer a chance to come out from shambles but this is not guaranteed.  Sports Authority’s saving grace would be to initiate a debt restructuring plan or sell off all its assets.

Michael Foss, the CEO of Sports Authority, said that they have taken measures to adapt the business, to conform to the changing dynamics in the retail industry.  The company intends to use the filing for Chapter 11 bankruptcy to further strengthen the company in operations and especially in finances.  These two aspects, once stabilized will bear financial flexibility to maintain operations.

Sports Authority’s brand name is still one of its best assets, as it has been established for quite some time.  This asset can be sold off to a competitor and even to an online retailer.

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