Sports Authority’s unsecured creditors have reached the end of their rope.
Lenders, landlords and suppliers filed a motion Friday to convert the case from Chapter 11 to Chapter 7, accusing the bankrupt retailer of abusing the system and stating that it’s “hopelessly administratively insolvent and will never, ever be able to propose a confirmable plan.”
“It is time for these cases to end,” court documents said.
Following months of speculation, Sports Authority finally filed for Chapter 11 last March and has since liquidated most of its assets, including inventory, store leases and intellectual property. The retailer’s going-out-of-business sales, which started in May, are winding down and the webstore is already closed.
But according to Friday’s filing, the longer Sports Authority remains in the Chapter 11 process, the worse off its unsecured creditors will be.
The retailer owes at least $50 million in administrative claims, along with a “superpriority” claim of at least $71 million. And while $23 million was set aside to cover professional fees and expenses, as well as $2.8 million to be paid as retention bonuses to senior management, a wind-down budget has yet to be filed, leaving many creditors in limbo.
If the case is converted to Chapter 7, a trustee will be appointed to liquidate whatever assets are left and distribute the proceeds based on “absolute priority.”
“Given the lack of any prospect for rehabilitation, the chronic administrative insolvency of these cases, and in order to conserve what little value may remain for the benefit of unpaid administrative creditors, these Chapter 11 cases should be converted to cases under Chapter 7 of the bankruptcy code,” the filing said.