On Saturday, Sportsman's Warehouse filed for Chapter 11 bankruptcy protection. The filing ends speculation that the Midvale, Utah based outdoor chain was struggling for survival despite announcing the closure twenty-three stores, layoff of nearly 2,000 employees and the exchange of fifteen other stores to Canada's United Farmers of Alberta cooperative as repayment of a late-2008 cash infusion.
That infusion was originally to have been the first phase of an acquisition of eighty percent of the chain by UFA. After due diligence, however, UFA said it was no longer pursuing the acquisition, instead taking fifteen stores along the Canadian border as repayment for the capital infusion in late 2008.
In the Saturday bankruptcy filing, the company listed assets of $436.4 million with liabilities of $452.1 million. Chief Financial Officer Rourk Kemp said in the court filings the company "another retailer victim of the worldwide global recession." Industry observers, however, say the company was victim of an overly aggressive and fatally-flawed business model.
A Chapter 11 filing is not a liquidation proceeding. It gives a company legal breathing room while it attempts to reorganize itself going forward. During that process, the company will keep its twenty-nine remaining stores open, continue to pay employees' wages and benefits and honor customer returns and exchanges and gift-card programs.
The filing says the company has secured $85 million in financing from GE Capital Corporation that will be available to it while it is under the Chapter 11 protections.
In the meantime, there are thirty unsecured creditors owed more than $34.2 million dollars who are watching the matter very closely.
Source: The Fishing Wire