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Sports Authority Will File for Bankruptcy in Near Future

Posted on in Bankruptcy
Sports Authority Will File for Bankruptcy in Near Future

A recent report from Bloomberg News states that Sports Authority, Inc., once the largest sporting goods store in the United States of America, is currently in the process of discussing Chapter 11 bankruptcy with its lenders, including TPG Capital Management LP. This is because the company is currently facing a debt payment due on February 15th.

In our capitalist economy, brands and stores rise and diminish with the interests of the public. Recently, our blog discussed famed surfwear brand Quiksilver's bankruptcy, which happened because of the company's sagging sales after the market moved away from surf and skate apparel and toward fast fashion. Sports Authority is similarly facing pressure from competitors like Dick's Sporting Goods and Lululemon, an activewear retailer best known for its sheer fabrics and yoga pants. Chapter 11 bankruptcy presents an opportunity for struggling companies to reorganize and become profitable once again. In its negotiations, Sports Authority has said that it plans to close more than 200 of its 450 current locations. It currently has approximately $643 million in debt.

Pressure from Online Retailers

Another company putting pressure on Sports Authority is Amazon, the online retailer that sells a wide variety of consumer goods. Amazon and other online retailers have been named as direct threats to many brick and mortar businesses since their rise in the late 1990s. But this does not tell the whole story. Traditional shops are still profitable for many companies, and some previously online-only retailers like Birch Box are now opening physical stores to provide a multi-sensory shopping experience for their customers.

Many specialty retailers have also felt pressure from more generalized big box retailers, like Target and Walmart, in the past decade thanks to the recession and the growth of these discount retailers. There is no one reason why Sports Authority's sales have suffered, but rather a variety of factors.

Recovering Through Reorganization

Filing for bankruptcy does not mean that Sports Authority is out of the game yet. Like other companies that have suffered low profits, Sports Authority and its lenders hope to recover from the current debt situation by changing how they operate the company. In addition to the store closures discussed above, the company might experiment with an altered business model or the cutting of large expenses, such as the naming rights to the Denver Broncos' stadium. Details about Sports Authority's bankruptcy plan have not yet been released, so currently, those interested in the case can only speculate.

Libertyville Bankruptcy Attorneys

If your company is struggling with debt, consider filing for Chapter 11 bankruptcy to reorganize and regain control of your finances. Contact our team of experienced bankruptcy attorneys at Newland & Newland, LLP to begin working on your case with our team. Even if you are not sure whether bankruptcy is the right option for you, our team can help you explore all of your options for managing your debt and help you come to the most productive solution.

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