Modell’s Sporting Goods Prepares Bankruptcy Filing, CEO Says

(Bloomberg) -- Modell’s Sporting Goods Inc. is preparing a bankruptcy filing that could come as soon as Sunday after the retailer failed to garner enough support from its vendors and landlords.

Following weeks of negotiations with its stakeholders, the family-owned retail chain is looking to file for Chapter 11 protection and sell assets through a court-supervised bidding process, Chief Executive Officer Mitchell Modell said in an interview Friday.

“Anything could happen” in the process, which is still under negotiation, Modell said. “The best-case scenario is that we maintain as many jobs as we can.”

Modell said that a number of retailers have already expressed interest in buying parts or all of the chain in bankruptcy, without disclosing names.

Modell’s recently hired the firm Tiger Capital Group LLC to liquidate 17 unprofitable stores. “We knew no one would want” the locations “at any price,” Modell said, adding that they’ve been “pleasantly surprised” by the recovery value through the sale process which he said has exceeded expectations.

Retail Pain

The sporting-goods empire operates around 140 stores in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and Washington D.C.

Sports merchandisers have experienced the pain of the retail upheaval that’s led to a wave of bankruptcies and a record number of store closings. For Modell’s, America’s oldest family-owned sporting-goods retailer, trouble deepened in January after a disappointing holiday season pinched cash flow.

Modell, 65, blamed warm weather, which translated to fewer outerwear sales, poor showings by professional teams like the Jets and Giants, which crimped merchandise demand, as well as competition from big-box stores like Walmart Inc. and Amazon.com Inc. Modell is still trying to avoid the fate of rivals such as Sports Authority Inc., which liquidated in 2016.

Modell’s hired Berkeley Research Group, RBC Capital Markets and the law firm Cole Schotz to help with a restructuring after the poor holiday season. BRG’s Bob Duffy is serving as chief restructuring officer.

The bankruptcy filing “should not come as a surprise to anyone,” after the result that came from negotiations, though “it’s unfortunate,” Modell said in the interview.

Modell’s aims to file with a stalking-horse bidder in place, someone who can come in with the highest and best offer for the company, said Modell. The highest and best bidder” should win out. Without one, “there aren’t many options left,” he said.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Michael B. Marois, William Selway

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