Modell’s Sporting Goods filed for Chapter 11 late Wednesday in New Jersey and plans to liquidate its remaining stores amid a challenging retail environment.
Founded in 1889, the company claims to be the oldest family-owned and operated retailer of sporting goods in the U.S.
“Over the past year, we evaluated several options to restructure our business to allow us to maintain our current operations. While we achieved some success, in partnership with our landlords and vendors, it was not enough to avoid a bankruptcy filing amid an extremely challenging environment for retailers,” said Mitch Modell, the company’s CEO, in a statement.
To liquidate its remaining stores, Modell’s teamed up with Tiger Capital Group. The process will begin in full on Friday morning, though it’s already underway at 19 stores. Modell said that the returns from those initial liquidations have been “beyond spectacular.” He added, “We are confident this performance will continue across the remaining stores, maximizing return for our creditors.”
Modell’s operates about 140 stores in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and Washington, D.C.
The retailer said its liquidation sales will include sporting goods equipment, footwear, team apparel and activewear. For the time being, the company will also continue its ecommerce activities.
Modell’s lenders and partners will provide it with the financial flexibility to run the business in the near term, including paying employee wages and benefits and filling and delivering customer orders.
“We are extremely appreciative of the support that our lenders [JPMorgan Chase and Wells Fargo], vendors and landlords provided during this difficult period, engaging in extensive renegotiation efforts and allowing us to pursue every possible avenue to preserve the jobs of our loyal associates,” Modell said.
“This is certainly not the outcome I wanted, and it is one of the most difficult days of my life,” he continued. “But I believe liquidation provides the greatest recovery for our creditors.”
Despite the bankruptcy and the initiation of liquidation, Modell’s will continue to engage in talks with its financial creditors about a recapitalization of the business via a sale of some or all of its assets or an equity investment.
Meanwhile, Robert Duffy, a managing director at Berkeley Research Group, has been named chief restructuring officer. In addition to Tiger Capital Group, Modell’s is working with consulting firm Berkeley Research Group, investment bank RBC Capital Markets and law firm Cole Schotz to assist with the bankruptcy. A&G Realty Partners is marketing the store leases.