The nation’s largest outdoor sporting goods retail network, with 162 stores in 27 states was facing an uncertain future. Competition from on-line retailers and over expansion resulted in slowed revenue growth and increased costs. Liquidity issues related to the accumulated losses and seasonality of the business was looming on the horizon, causing concern with the company’s vendors and secured lender.
The Client’s board of directors engaged Lighthouse. After assessing alternatives, Lighthouse determined that a Chapter 11 bankruptcy filing was the best way to maximize value for the company’s stakeholders.
Working with management, Lighthouse quickly developed a plan to file Chapter 11 and begin a sale process. Lighthouse negotiated the terms of a DIP facility allowing the company time to put its plan into effect. Liquidation sales at the 32 lowest performing stores were started immediately upon the Chapter 11 filing. A stalking horse bid was negotiated and ultimately the company was sold in a 363 auction process. The resulting sale and inventory liquidation paid the company’s secured creditors in full and allowed the acquiring entity to continue or reopened nearly 60 stores across the country maintaining a significant number of jobs and a critical retail outlet for the company’s numerous vendors.