Reorganization has gone out the window for Sports Authority.
The sporting goods retailer, which filed for bankruptcy on Mar. 2, is giving up on trying to fix the business and emerge from bankruptcy and instead wants to sell its holdings to willing buyers if it can find them.
“It has become apparent that the debtors will not reorganize under a plan but instead will pursue a sale,” Sports Authority lawyer Robert Klyman told Judge Mary Walrath at a hearing in the U.S. Bankruptcy Court in Wilmington, Delaware, on Tuesday.
The retailer—saddled with more than $1.1 billion in debt—had hoped to close some stores, generate cash from going-out-of-business sales and restructure, but now the company’s operations will be up for auction on May 16, according to The Wall Street Journal.
Some closing sales are already underway at stores on the liquidation list and from those originally expected to be kept alive, and money from the sales is rolling in.
Proceeds from the closing sales have been a point of contention between Sports Authority and its suppliers. Just last week Sports Authority backed out of an agreement that would have seen suppliers take home 60 percent of the proceeds from those sales. Suppliers who feel the money from the sales of their goods should come to them rather than going to lenders have been reluctant to fill orders with the store.
Talks are ongoing about Sports Authority’s ultimate end, The Journal said, referencing Klyman, but for now Chapter 11 reorganization is no longer an option and a liquidation plan that looks at how the company will deal with its debt is more likely.
Major potential bidders are reportedly reviewing the retailer’s assets and Sports Authority is hoping for a favorable outcome from next month’s auction. If a liquidator bids and wins the auction, however, there’s no telling what will come of the Sports Authority stores.