Modell’s Sporting Goods has filed Chapter 11 bankruptcy to facilitate the liquidation of its stores after reaching an impasse with a potential buyer.
The 131-year-old company cited the “extremely challenging” retail environment as it joined a parade of sporting goods retailers that have gone bankrupt in recent years, including Sports Authority, Sport Chalet, City Sports, MC Sports, and Eastern Mountain Sports.
Modell’s had been seeking rent concessions with landlords and a debt restrcuturing with creditors but decided, according to court papers filed on Wednesday, that an “orderly liquidation” of its 134 stores through the Chapter 11 process was “the best available option to maximize value for the benefit of all stakeholders.”
“This is certainly not the outcome I wanted, and it is one of the most difficult days of my life,” CEO Mitchell Modell said in announcing the filing. “But I believe liquidation provides the greatest recovery for our creditors.”
The filing came a day after negotiations with the potential buyer were terminated. “Given the lack of interested parties and the debtors’ tightening liquidity, it became clear that the pursuit of a going concern sale was no longer viable,” Chief Restructuring Officer Robert Duffy said in a court declaration.
Modell’s, which calls itself America’s oldest family-owned and operated sporting goods retailer, was founded as a single store in lower Manhattan by Morris A. Modell, the current CEO’s great-grandfather, in 1889.
The Modell family built it into a “sporting goods powerhouse with an omni-channel footprint,” Duffy said, but sales have lately been hit by competition from online, big-box and specialty retailers, a decline in sports team participation among youth and teens, and changing consumer preferences.
Warm weather this winter in the Northeastern states also hurt sales of cold-weather goods and items and overall store traffic, Modell’s said.
The company decided to proceed with a liquidation of all its stores after conducting store closing sales last month at 19 locations. The return from those sales “has been beyond spectacular, and we are confident this performance will continue across the remaining stores,” Modell said.