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Sports Authority Scraps Supplier Settlement

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

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Sports Authority, it seems, wants to carry on the drag-out fight its been having with suppliers.

The sports company in the midst of bankruptcy said it reached a deal earlier this month with consignment suppliers who wanted their goods back instead of having them sold in Sports Authority’s going-out-of-business sales.

Sports Authority had agreed to a settlement with the 160 consignment suppliers—each of which it had sued separately to prevent seizure of the goods—that would provide suppliers 60 percent of the proceeds from closing sales.

On Wednesday, however, in a filing with the Delaware bankruptcy court, Sports Authority said it was revoking the motion to approve the supplier settlement and gave no reasons why.

Agron Inc, an official licensee for Adidas, was one of the first to sign the deal with Sports Authority, and an attorney for the company said his client was “disappointed” by the deal.

“The reality is they reneged on the settlement,” David Kupetz of Sulmeyer Kupetz PC told Law360. “It certainly came as a significant disappointment based on the fact we put a lot of work into it, as did the debtor. I don’t know why three weeks ago it was a tremendous accomplishment and now they’ve discarded it.”

Sports Authority filed for bankruptcy on Mar. 2, and with plans to close 140 of its stores, the retailer said it would be “devastated” without the merchandise to sell in closing sales that are expected to provide a much-needed boost in its cash position.

“The demise of the settlement could have a chaotic effect on a case that has many issues remaining in limbo,” according to Law360, including pending approval on the use of its $595 million bankruptcy loan and a call from landlords to immediately pay the first round of post-filing rent at its 450 stores, which Sports Authority is reportedly resisting.

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