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Shoe Company Rockport Files for Bankruptcy

The Rockport Group and its U.S. and Canadian subsidiaries filed voluntary Chapter 11 bankruptcy on Tuesday.

The footwear 47-year-old company has entered into an asset purchase agreement with CB Marathon Opco LLC, an affiliate of Charlesbank Equity Fund IX in which Charlesbank will acquire substantially all of Rockport’s assets.

According to Rockport, the transaction with Charlesbank will ensure the continuation of its business and provide a clear path forward as it will focus on its global wholesale, independent and e-commerce operations. Charlesbank will serve as a “stalking horse bidder” in a court-supervised sale process, and the agreement is subject to higher and better offers, among other conditions.

The balance of The Rockport Group’s businesses, which include Aravon, Dunham and the Rockport Cobb Hill Collection, are still operating as normal, the company said a statement. Rockport said it has obtained $20 million in debtor-in-possession financing from its existing noteholders, which, in addition to its existing $60 million credit facility, will provide the company with liquidity to maintain its operations through the sale process. Rockport has filed a series of motions seeking authorization to pay employee wages and benefits, honor customer commitments and otherwise manage its day-to-day operations through the sale process.

Rockport expects to pay for all goods and services delivered on or after May 14. Payment for goods and services delivered prior to the filing will be addressed through the Chapter 11 process. Under the terms of the agreement, Charlesbank will assume responsibility for payment of certain pre-petition obligations to product suppliers of the acquired assets. This will enable the company to maintain the supplier and vendor relationships that are essential to its business and help ensure seamless continuity of the manufacturing and delivery of merchandise.

The agreement with Charlesbank includes Rockport’s global wholesale assets, e-commerce platform and retail operations in Asia and Europe. In addition, Charlesbank will have the opportunity to evaluate Rockport’s North American retail operations and determine whether it will pursue acquisition of any of these locations. In this regard, Rockport is seeking court authorization to close the North American retail stores that are not acquired by Charlesbank or another party.

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Rockport said with the filing in U.S. Bankruptcy Court in Delaware and the financial strength and support of Charlesbank, it will be better positioned in today’s evolving retail landscape.

With debt of $287 million, Rockport has changed hands a number of times in recent years prior to bondholders taking ownership last year. Adidas AG acquired Rockport when it bought Reebok in 2006. In 2015, Adidas sold Rockport for $280 million to Berkshire and New Balance.

According to a court filing, Rockport’s current equity owners include Crescent Entities, GoldPoint Enities, Corporate Capital Trust Inc. and Oregon Public Employees Retirement Fund. Richards, Layton & Finger PA is serving as legal counsel to Rockport. Alvarez & Marsal is serving as restructuring adviser and Houlihan Lokey Inc. is serving as investment banker and financial adviser.