A few weeks ago, we wrote about a sports equipment company, Golfsmith, going bankrupt. In that post, we talked about the declining popularity of golf, and how that has played a role in Golfsmith’s bankruptcy.
We bring this up because another sporting goods company recently filed for bankruptcy: Performance Sports Group. PSG is known for making Bauer hockey gear and Easton baseball gear. While it is unclear if the decline in hockey popularity over the last decade spurred PSG’s filing, it certainly appears that there were serious debts in play with PSG, and the company’s creditors were looking for PSG to comply with restructured loan provisions.
The bankruptcy for PSG has major implications for the company, obviously. One of the key elements about this particular case is that it is a “pre-packaged” bankruptcy. This is a streamlined bankruptcy process that is meant to be completed more quickly. In a true “pre-packaged” filing, the company’s plan of reorganization must generally be agreed to in advance by the company’s creditors and shareholders.
In PSG’s case, one of the capital groups involved that has a stake in Adidas (which owns a rival company to Bauer) will become a stakeholder in the company if the plan of reorganization is approved. This will certainly need thorough vetting.
As you can see, companies that go through bankruptcy have the ability to manage their exit plans and prepare for the future. Bankruptcy does not have to be the “death” of a company.
Source: New York Post, “Sports equipment company to file for bankruptcy,” Josh Kosman, Oct. 30, 2016
