Sporting goods giant misses debt payment, faces bankruptcy

On behalf of Furr & Cohen, P.A. posted in business & commercial bankruptcy on Friday, February 12, 2016.

Unmanageable debt is not generally something that accumulates overnight, particularly for businesses. In many cases, companies take on debt in the beginning or when there are changes being made and the intent is to pay that down over time with the profits that are expected to come in.

However, when those profits slow down or end up being smaller than anticipated, it can be harder and harder for businesses to keep up with debt payments. Ultimately, it may be necessary for that company to liquidate assets or reorganize through bankruptcy.

That appears to be the situation in which Sports Authority has found itself. According to reports, the retail sporting goods giant failed to make a $20 million debt payment recently and now must try to somehow come up with the money or negotiate with lenders to avoid defaulting on the loan.

The missed payment is believed to be linked to several problems that are and are not unique to Sports Authority. Like other brick-and-mortar stores, Sports Authority has struggled to remain competitive with online retailers and higher end stores. However, Sports Authority also spends an enormous amount of money for the naming rights to the Denver Broncos stadium every year.

It has been suggested that the company may potentially close roughly half of their stores where they may be losing money. Whether that would impact the multiple locations in and around Boca Raton has yet to be determined. This could help them get out of unprofitable situations and focus on areas where there are better opportunities to make money.

Sports Authority is hardly alone in this situation. Companies large and small often face financial troubles at some point.

Business owners who may be in a similar situation of missing loan payments would be wise to act quickly to identify a solution. In some cases, it is certainly possible to renegotiate with lenders; in other cases, more aggressive steps will need to be taken to pay down or discharge debt. Discussing your options with an attorney sooner rather than later can be crucial for a company’s future and bottom line.

Source: WSBT, “Sports Authority faces possible bankruptcy,” Chris Isidore, Feb. 9, 2016