Brew Crew Drawn Into Sports Authority Bankruptcy

A few months ago, the sporting goods retailer Sports Authority declared bankruptcy. At first the company was planning to close only a few stores and work on reorganizing, but just a few weeks ago, it was announced that the company will now be closing all of its stores and wrapping up operations. Other than the four stores in the Milwaukee area that will be closing, it did not seem like this bankruptcy was going to impact our area that much, until it was revealed that Sports Authority is asking its bankruptcy judge to void a sponsorship contract it has with the Brewers.

If you check the back of printed Brewers tickets, you will notice a coupon for $10 off a purchase of $50 or more at Sports Authority. The retailer presumably does not want to honor these coupons on top of its already priced-for-liquidation discounts, so it is asking the bankruptcy judge to void the contract.

If this request is approved, it is unclear how it will impact the Brewers. Has Sports Authority already paid for the full season, or does it owe the Brew Crew money? If it has already paid to sponsor the whole season, and the contract is cancelled, will the Brewers have to refund part or all of the money since the season is ongoing? Will they have to print new tickets?

Our firm is not involved with the Sports Authority bankruptcy, but this sort of situation is very familiar to us. One of our specialties is business bankruptcies, and we work with both businesses who are having financial difficulties, and businesses doing business with troubled businesses.

When one business is facing bankruptcy, it can have a ripple effect on every business that business does business with. For example, if a business goes bankrupt and stops paying its creditors and ordering new merchandise, the other businesses that business does business with might also go bankrupt if they were counting on orders or money from the troubled business to keep their cash flowing. In order to prevent this sort of chain reaction, businesses who know they are facing a rough patch will bring us in to negotiate what is known as a workout agreement.

A workout agreement is a creative solution that allows companies who are facing what could be mutually assured destruction, to literally work out a new agreement. Sometimes we renegotiate new contract terms, or simply delay a scheduled payment, but sometimes we negotiate things like a real estate swap in lieu of payment. What a workout agreement ends up looking like really depends on what is mutually beneficial to the companies involved, but it is always a gratifying situation to be a part of since it often is the thing that allows a troubled business to stay open and get back on its feet without bringing down the entire supply chain.

It is obviously too late for a workout agreement to save Sports Authority from bankruptcy, but hopefully whatever happens in the bankruptcy will not be too much of a burden on the Brew Crew. Heaven knows the Brewers don’t need any additional challenges right now as they fight to stay out of the cellar and above .500.

Reasons for Bankruptcy Dismissals

Under what conditions can a bankruptcy be dismissed?

For many individuals, filing bankruptcy can provide debt relief and the chance to make a fresh start. By failing to comply with state and federal bankruptcy laws and following all the procedures, however, a bankruptcy can be dismissed

How do I qualify for bankruptcy?

In order to file a Chapter 7 bankruptcy, you must demonstrate that your income for the 6 month period preceding the filing is lower than the median income in your state. If you earn more than that, you must past a means test and show that you do not have enough disposable income to pay your debts – this test relies on national and local expense standards and some of your actual expenses. If you do not meet the criteria, the bankruptcy may be dismissed or converted to a Chapter 13 filing.

Bankruptcy Dismissals at a Glance

Credit Counseling

Before you file for bankruptcy, you must attend credit counseling with an agency approved by a bankruptcy trustee. Once the course is completed, you will receive a certificate and you can file in a local bankruptcy court. If you do not complete the course before you file, the bankruptcy will be dismissed.

Bankruptcy Fraud

If your commit bankruptcy fraud, the court or the trustee will dismiss your case. Not only will you lose your discharge, you may also face criminal charges. It is crucial that your financial information, such as your income, assets and liabilities, is accurate.

Filing Fees

Filing bankruptcy is not free – there are filing fees that must be paid in order for the court to administer your case. If you cannot pay the fees because you do not earn enough money, the court may grant you a waiver. If your application for a waiver is denied and you do not pay the fees, your case will be dismissed.

Filing Forms/Creditor Meeting

Filing for bankruptcy involves completing and submitting a variety of forms that disclose your financial affairs. By failing to file all the required forms, the court will dismiss your case. Similarly, after your initial filing, you must also provide the trustee with tax returns, pay stubs and other documents that support the financial information. These documents must be filed at least one week prior to the 341 meeting of creditors. If you fail to attend this mandatory meeting, the trustee will most likely dismiss your case.

Failing to Make Chapter 13 Payments

A Chapter 13 bankruptcy, also referred to a s a reorganization bankruptcy, allows you to keep your property provided that you pay back some of your debts over a 3 to 5 year period. If you fail to make the scheduled payments, the bankruptcy will be dismissed.

In the final analysis, filing for bankruptcy is a serious consideration, that requires you to closely follow a number of laws and procedures. Failing to do so will lead to your bankruptcy being dismissed by the court or the trustee. For this reason it is essential to engage the services of an experienced bankruptcy attorney.