Sports Authority Reaches Settlement with Consignment Suppliers

by San Antonio Attorney

Sports Authority appears to have resolved a dispute with its consignment suppliers.  This agreement can resolve more than 160 lawsuits.

The lawsuits cost approximately $85 million and involve around winter gears sold at retailer stores and the suppliers, which have sold the products on consignment.  The suppliers have demanded their products to be returned after Sports Authority has filed for bankruptcy.

If the settlement gets approved by Bankruptcy Judge Mary Walrath in the court of Delaware, Sports Authority will be allowed to sell the consignment products while the bankruptcy proceeding is ongoing, according to recent reports.

Financial restructuring is the main priority of the retailers and especially at a crucial time when 140 of its store have already closed due to bankruptcy.  When the suppliers told Sports Authority that they are going to do a major pullout of the products, the company sued 160 of these suppliers.  Lawyers have emphasized that this move of pulling out goods can affect the business negatively.

Though Sports Authority is on its way to financial recovery, the problem is still far from over as the company is still suffering from debt due to a $1.3 billion buyout ten years ago.  Judge Walrath will have to decide if the retailer can get more out its bankruptcy loan and the sporting goods store also need to find purchasers for the remaining stores as well.  This is done to protect the company from other rivals such as Amazon and Dick’s Sporting Goods.

Sports Authority was saved by a hedge fund a decade ago and it was considered as one of the largest sporting retailer.  But the company has recurrent issues of huge debt loads due to that leveraged buyout.  The company’s rivals are way ahead of their game through improved shopping experience.

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