Sports Authority files for Chapter 11

Sports Authority is filing for Chapter 11 bankruptcy protection and plans to get rid of almost a third of its stores – including at least six in California.

NASDAQ has reported that the sporting good retailer chose to file for bankruptcy due to the fact that they owe Nike $48 million dollars as well as $23 million to Under Armour.

But if you have a gift card, it’s best to use it as soon as possible, according to advice the Better Business Bureau provides to customers of stores in Chapter 11.

During the Chapter 11 process, Sports Authority stores will remain open and continue to operate on normal schedules. However, it plans to close or sell 140 stores and two distribution centers in Chicago and Denver in the coming months as part of the restructuring.

“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry”, Foss said in a news release.

The Englewood, Colo.-based company has 463 stores in 41 states and Puerto Rico.

While Sports Authority did not designate specific criteria for the stores slated to close – other than saying in court documents that most are “underperforming or unprofitable” – retail analysts suggest the targeted locations could be the ones located next to the company’s chief rival, Dick’s, which has outperformed Sports Authority in recent years. The executive said the company needs fewer stores as consumers are increasingly shifting to online shopping. Macy’s Inc. has opened Macy’s Backstage in order to go head to head with discount retailer T.J. Maxx. “This was a tough decision to make, but we believe it was a necessary step in our plan to make Sports Authority an even better partner for our customers”.

Sports Authority also said it expected to have access to up to $595 million in debtor-in-possession financing during its restructuring. The company plans to evaluate all options, he said.

In addition, he wrote, Sports Authority has “substantial debt obligations”, including more than $1.1 billion in funded debt.

“Given our strong brand recognition with a large and growing customer base, valuable business assets and loyal team members, we have received strong interest from third parties interested in investing in or buying some or all of Sports Authority”, Foss said in his statement. Sports Authority, once the biggest sporting-goods chain in the USA, files for bankruptcy Wednesday.