Boston-based athletic gear retailer City Sports Inc. filed for chapter 11 bankruptcy Monday in order to liquidate at least a quarter of its stores.
City Sports said it has a deal with liquidators Tiger Capital Group to hold going-out-of-business sales at eight of the company's 26 stores, which are scattered throughout the Northeast from Massachusetts to Washington, D.C. For the remaining 18 stores, City Sports is working to locate a buyer during its bankruptcy case that would either continue operating the stores or liquidate them, the company said in court documents.
In recent days, City Sports said several potential purchasers have expressed interest in continuing operations at those stores. To capitalize on that interest, and because the stores will be forced to liquidate if no sale occurs by Oct. 30, City Sports has requested that the U.S. Bankruptcy Court in Wilmington, Del., consider its auction proposal by Oct. 19.
The company, which is 83% owned by funds affiliated with Highland Capital Partners, said that record-setting weather on the East Coast has harmed sales of certain of its products, which were already struggling to compete in the athletic sector crowded by giants like Sports Authority and Dick's Sporting Goods Inc., big box retailers like Wal-Mart Stores Inc. and Target Corp. and new entrants like Lululemon Athletica Inc.
By April 2014 it was clear that City Sports would have to make changes in order to stay afloat, so it hired financial advisers at FTI Consulting Inc. to help it reduce costs. Store hours were cut, the labor force reduced and freight deliveries slowed, the company said. But one big issue that plagues so many distressed retailers couldn't be fixed?store leases. Negotiations with landlords didn't yield the kind of cost reductions that City Sports said it needed to stay solvent, so it entered bankruptcy.
City Sports was founded in 1983 and sells athletic apparel and equipment from the likes of Nike and Asics, in addition to its own line called CS by City Sports.
The chain employs 816 people and entered bankruptcy claiming $38.6 million in assets and $39.6 million in liabilities. In bankruptcy, City Sports has requested permission to continue paying wages and benefits to its employees?a standard request in chapter 11?and to continue honoring customer gift cards and exchanges.
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