If you “gotta go to Mo’s,” you’d better make it quick.
Just weeks after the ailing retailer launched a last-gasp effort to crowdsource new investors in hopes of selling a minority stake, Modell’s Sporting Goods filed a voluntary Chapter 11 petition for bankruptcy court protection Wednesday with plans to liquidate the company and close all 153 stores.
It’s the beginning of the end for the 131-year-old seller of Nike sneakers, Adidas running shoes, Champion T-shirts and other athletic accoutrement. According to the petition filed in a Newark, N.J., federal bankruptcy court, current lenders JP Morgan Chase and Wells Fargo will supply financing to sustain Modell’s through the winding-down process.
To liquidate stores—where going-out-of-business sales will begin Friday—Modell’s is working with Tiger Group, which helped the retailer close 19 locations last month. The company’s 153-store base spans 10 states: New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia, in addition to Washington, D.C., and an e-commerce site at modells.com.
“The return from the liquidation of the first 19 stores managed by Tiger has been beyond spectacular, and we are confident this performance will continue across the remaining stores, maximizing return for our creditors,” CEO Mitchell Modell said.
Modell’s faced a severe liquidity crisis coming out of the holiday season, posting “$38 million less in receipts [and] dropped $50 million in sales” over the November-December period, which precipitated the financial catastrophe.
On Wednesday, the CEO said he chose liquidation because he believes it “provides the greatest recovery for our creditors.”
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“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,” he said.
BRG managing director Robert Duffy was named chief restructuring officer, tasked with steering the retailer through bankruptcy.
Modell’s “will continue to pursue…discussions” with its financial creditors exploring some form of recapitalization of the business, either through a potential sale of some or all of its assets, or an equity investment.
Morris Modell birthed the sports-centered business in 1889 when he opened a store on lower Manhattan’s Cortlandt Street. The CEO is the third generation in the family to run the retail enterprise.
Modell’s filing follows in the wake of Barneys New York’s industry-rattling 2019 liquidation, which transferred its intellectual property assets over to new owner Authentic Brands Group.
But Modell’s bankruptcy also adds to troubles in a particularly hard-hit sector: sporting goods retailers. Since 2016, Sports Authority liquidated, Eastern Mountain was sold to Sports Direct and most Golfsmith stores closed, but a few were sold to Dick’s Sporting Goods, which converted the sites to its Golf Galaxy brand.