Modell’s Files For Bankruptcy and Intends To Liquidate Its Assets
In New Jersey, Modell’s Sporting Goods filed for Chapter 11 bankruptcy protection.
The family-owned retailer will begin liquidation sales in all of its locations, with online sales continuing throughout the process.
Mitchell Modell, the company’s fourth-generation owner, attempted unsuccessfully to rally support from the firm’s stakeholders, including suppliers and bankers, to keep the chain out of court. Modell stated in court documents that if it couldn’t find a buyer by 12:30 p.m. Tuesday, it would file for bankruptcy and liquidation.
The firm’s lenders and long-term partners will provide the company with the financial flexibility it needs to run the business in the short term, including prompt payment of employee salaries and benefits, continuous delivery of client orders and shipments, and other obligations as they become due.
Modell’s shops will begin liquidation sales of sports goods equipment, footwear, team clothing, and active apparel in all locations, as well as online sales, as part of their store closure process.
Beginning March 13, the company will launch store-closing liquidation discounts in collaboration with Tiger Capital Group.
“We examined various alternatives to reorganize our company over the last year to preserve our current operations. While we had some success working with our landlords and suppliers, it wasn’t enough to save us from declaring bankruptcy in a challenging retail environment,” Modell said in a statement.
“We are grateful for the assistance that our lenders (JP Morgan Chase and Wells Fargo), suppliers, and landlords gave during this challenging time, enabling us to engage in lengthy renegotiation attempts and seek every available option to keep our valued colleagues employed. I’d like to thank every one of our employees, as well as our customers, for their long-standing support of Modell’s.
This is not the result I had hoped for, and it has been one of the most painful days of my life. However, I think that liquidation would offer the best results for our creditors. We’ve teamed up with Tiger Capital Group to liquidate the remaining shops, which will begin on Friday, March 13. The return on the first 19 Tiger-managed shops has been phenomenal, and we are optimistic that this trend will continue throughout the other locations, optimizing returns for our creditors.”
Modell’s has been in talks with its creditors about a possible recapitalization of the company, including the sale of part or all of its assets or an equity investment. The Company will pursue these talks.
BRG’s managing director, Robert Duffy, has been appointed the company’s chief restructuring officer. RBC Capital Markets is serving as the Company’s investment banker. The Company’s restructuring adviser is BRG, its legal counsel is Cole Schotz, and A&G Realty Partners is marketing the retail leases.
Modell’s said in February that it would shut certain shops and was contemplating selling a minority interest in the business as it searched for ways to stay solvent.
In New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia, and Washington, D.C., Modell’s has 153 locations.
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