SNEWS® wrote on Oct. 30 that Copeland Sports had started to lay off employees and was on the brink of some still-unknown dramatic changes. Now we know what those are.
In court papers filed in the U.S. Bankruptcy Court, District of Delaware, on both Nov. 1 and 2, Copeland management has entered an agreement to sell all assets of the remaining chain, a follow-up to its Aug. 14 filing for Ch. 11 bankruptcy reorganization. Although based in California, Copelands' Enterprises is a registered Delaware corporation. The "stalking horse bidder" is a joint venture made up of The Sports Authority and Hilco Real Estate. Papers indicate that TSA expects to take over seven to 13 of the remaining 20 stores, if successful in its bid, while Hilco will get the remaining locations, although it is unsure what will happen to those locations. A statement from Copeland Sports issued Nov. 3 stated Hilco (www.hilcomerchantresources.com) will "acquire or remarket" those locations.
Employees remaining after the company started laying off staff the week of Oct. 23 (Oct. 27 was dubbed by insiders as "Black Friday") were called into a staff meeting at 9 a.m. on Nov. 3 after reading of the company's agreement that morning in the local paper for the San Luis Obispo, Calif., area, where Copeland is headquartered.
In the week leading up to the meeting, many buyers and other staff members were terminated without notice, leaving employees confused and frustrated yet lacking any information about what was going on. Employees remaining -- mostly IT and accounting -- were told at the meeting they would all receive a "Warren Notice" in the next couple of days. Federal law requires that companies with 100 or more employees that are going to do major layoffs must issue this notice in which employees are given 60 days notice of a possible termination. Insiders said it is possible some would receive offers to work for TSA, but that would most likely require a move to its Englewood, Colo., headquarters near Denver. Some might remain longer than the required 60 days.
CEO John Brincko did not return a call seeking clarification or comment. The company's press release, "Copelands' Enterprises Announces Definitive Agreement for Sale of Assets," can be read by clicking here. Brincko is the founder and CEO of Brincko & Associates (www.brincko.com). He is known as a restructuring and turnaround manager, as well as an expert in crisis management and financial analysis. His company also liquidates firms. He had replaced Barry Soosman, who had been named CEO on Aug. 14, when Copeland filed for bankruptcy and the Copeland family announced it would take over the chain again and right the sinking ship.
Although the company statement noted that the "definitive asset purchase agreement" was entered into with the TSA/Hilco group, court documents obtained by SNEWS® detail the bidding and auction procedure typical in bankruptcy liquidations. Although the TSA/Hilco group is the "stalking horse" or lead bidder and approved by the bankrupt company, other qualified bids will be accepted and could in fact be chosen as the winner over the pre-auction lead bidder.
The court has agreed to move up the auction, originally set for Nov. 15 with sale approval on Nov. 17, to Nov. 6 as the deadline for responses, bids or objections, with the court auction scheduled for Nov. 8. Copeland won the earlier date by noting a pressing nature due to the traditional holiday shopping season kickoff over the long Thanksgiving weekend, Nov. 24-26.
Copelands' Enterprises chose TSA/Hilco as the "stalking horse bidder" over Great American Group, which is conducting the going-out-of-business sales at the 11 locations now closed or closing. The winner of the stores will earn all assets, including leases, signage, trademarks and names, but will be free of any liens, claims or interests, court documents stated.
Insiders see the move by TSA as one way to pump up its Northern California representation, while possibly putting up another hurdle to keep Dick's out of the state. So far, the Pittsburgh, Penn.-based, chain with 268 stores in 34 states has reached westward only to Nevada. TSA on the other hand has 61 stores in California with two-thirds of those in the middle and southern part of the state. Copeland had 21 stores in California before the recent September closings, with most of those in the Northern part of the state; however, seven of the 11 stores closing or closed are in California.
To read the Oct. 30 SNEWS® story, "Copeland Sports could be on the brink. But of what?" click here.