GRAND RAPIDS — MC Sports, a Grand Rapids-based sporting goods retailer operating in seven Midwest states, filed for Chapter 11 bankruptcy today in the U.S. Bankruptcy Court for the Western District of Michigan.
Citing weak Black Friday sales last November after it made significant capital investments in many of its 68 retail stores, the company said it will immediately begin liquidating its stores, according to a court filing.
The company has retained Boston-based Tiger Capital LLC and Great American Group LLC to manage the store closings.
The move comes after MC Sports failed to strike a deal with trade creditors, vendors and landlords to restructure the company’s balance sheet, President and CEO Bruce Ullery said in a statement.
With a “viable out of court proposal” off the table, MC Sports, whose legal name is Michigan Sporting Goods Distributors Inc., opted to file for bankruptcy and liquidate its stores.
Ullery holds 86 percent of the company’s equity, with the remainder owned by the rest of the executive management team, according to the court filing.
In a string of motions filed today, MC Sports sought bankruptcy protections from a variety of creditors to allow it to continue doing business during the liquidation process.
The company said it incurred losses of $5.4 million before taxes on sales of $174.6 million in 2016.
MC Sports has a $75 million revolving credit facility with San Francisco-based Wells Fargo & Co. As of today’s filing, MC Sports had drawn $49.35 million on the credit facility.
Additionally, the company said it had $78 million in assets, including inventory valued at $62 million, and between $50 million and $100 million in liabilities, according to the filing.
The company owes $27.6 million in trade and other unsecured debts to vendors such as Nike ($3.8 million), Under Armour ($2.4 million), and Columbia Sportswear ($912,686). Locally, MC Sports owes $228,303 to Grand Rapids-based advertising buyer Professional Media Management.
The company owns no real estate and said it pays $1.2 million per month in rent, according to the filing.
By the end of the month, MC Sports said it will have closed seven stores since Oct. 1, 2016. None of them were in Michigan.
It wasn’t immediately clear what would happen to MC Sports’ approximately 1,300 employees. The company owes $150,000 in unmatched contributions to its 401(k) program to 503 employees for 2016, plus approximately $614,000 in unpaid vacation time, according to the filing.
Judge John Gregg is presiding over the case.
MC Sports has retained Grand Rapids-based law firm Warner Norcross & Judd LLP.
Calls for comment were not returned as this report was published.
