Sports Authority Inc filed for Chapter 11 protection on Wednesday in the face of growing online competition, touching off a scramble to close weaker stores and find a buyer before the end of next month.
The sporting goods retailer sought Bankruptcy Court approval to hire liquidators and immediately begin store closing sales at up to 200 of its 463 locations, according to court documents.
The privately held Englewood, Colorado-based company also said it planned to close or sell two of its five distribution centers, in Denver and Chicago.
"This decision follows a comprehensive review of the Sports Authority store portfolio in light of the increasing amount of shopping that is occurring online," the company said in a statement.
Outdated information systems, frequent turnover in its leadership and a history of mergers were also to blame for the chain's bankruptcy, according to a court filing by its chief financial officer, Jeremy Aguilar.
In the past year, retailers such as teen retailer Wet Seal Inc and electronics chain RadioShack Corp have used bankruptcy to close underperforming locations.
Sports Authority also said it expected to have access to up to $595 million in debtor-in-possession financing during its restructuring.
It said in court documents the loan was needed to reassure vendors as some had begun to withdraw their support after the chain missed an interest payment in January.
However, lenders required Sports Authority to seek binding bids for the business by April 21 and a closing of a sale by April 28.
The loan terms are subject to approval by the U.S. Bankruptcy Court in Wilmington, Delaware. The company also has the option to present a plan of reorganization, but it must have been approved and become effective by the end of June.
"We have received strong interest from third parties interested in investing in or buying some or all of Sports Authority," Chief Executive Officer Michael Foss said.
Sports Authority is owned by private equity group Leonard Green & Partners LP, which bought it in 2006 for $1.3 billion.
In a court filing, Aguilar said Sports Authority had assets of $1.3 billion and liabilities of $1.1 billion.
Rothschild Inc is Sports Authority's financial adviser, FTI Consulting is its restructuring adviser, and Gibson Dunn and Young Conaway Stargatt & Taylor is its legal counsel.
The case is Sports Authority Holdings Inc et al, U.S. Bankruptcy Court, District of Delaware, No. 16-10527.