San Diego residents may remember a recent post here discussed the pending bankruptcy filing of Golfsmith, America's largest golf retailer. The bankruptcy filing apparently became necessary due to a variety of reasons, from the downturn of interest in golf impacting sales to the fact that Golfsmith had nearly $200 million in debt. However, even as Golfsmith prepared to file for bankruptcy, it was obvious that there was a party interested in acquiring the company: Dick's Sporting Goods, America's largest sporting goods retailer.
Now, a recent report notes that Dick's Sporting Goods has indeed acquired Golfsmith via a bankruptcy auction. The purchase price? $70 million for all of Golfsmith's assets, inventory and intellectual property. The next steps are to see what Dick's Sporting Goods intends to do with Golfsmith in the wake of the bankruptcy auction.
The recent report notes that of all of Golfsmith's approximately 139 locations, Dick's Sporting Goods will likely close about 109 of them. However, approximately 30 locations may stick around. But, the reports included no details as to how those locations would be branded.
For some businesses that file for bankruptcy, an auction of the assets, inventory and intellectual property may be the only way for some semblance of the company to remain. In many cases that is the only result that creditors will accept in order to recover at least some of the debt that is owed. However, it is important to realize that a business bankruptcy ending in an auction is just one possible result. There are many options in a business bankruptcy.
Source: Golf Digest, "Dick's Sporting Goods buys up Golfsmith stores at bankruptcy auction," Mike Stachura, Oct. 21, 2016