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Law360 (April 20, 2020, 10:02 PM EDT ) Modell's Sporting Goods Inc. wants to delay its Chapter 11 proceeding for an extra month because continuing COVID-19 shutdowns are preventing it from holding the liquidation sales it needs to generate cash, according to a notice filed Monday in New Jersey Bankruptcy Court.
In its notice, the retailer said it intends to ask U.S. Bankruptcy Judge Vincent F. Papalia to extend the 30-day pause he granted in late March until May 30, given that orders aimed at "minimizing infections and deaths from the novel coronavirus ... continue to prevent the debtors from conducting retail sales at their various locations."
Creditors have until April 24 to file objections, and a telephone hearing is set for April 30, the original end date for the pause, the notice said.
Judge Papalia had acknowledged the possibility of an extended pause during a March 27 hearing in which he noted the "uncertainty on top of uncertainty" posed by the unprecedented global health crisis.
The jurist at the time granted Modell's request to pause the case through April 30, after the retailer explained how government orders to close nonessential businesses had scuttled its ability for now to conduct liquidation sales that would help fund post-petition expenses like rent.
The pause bid had drawn pushback from the retailer's landlords, who objected to a budget plan that delayed rent payments for Modell's stores until August. The landlords are appealing Judge Papalia's March 27 order granting the original pause.
In its Chapter 11 petition filed March 11, the 131-year-old sporting goods giant cited the challenging retail environment and detailed more than $100 million in debt and plans to liquidate all its stores. Modell's operates locations in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and Washington, D.C.
The company has partnered with Tiger Capital Group LLC to liquidate its remaining 134 stores, according to court records. Modell's had touted the "beyond spectacular" returns from the liquidation of its first 19 stores, expressing confidence the continued liquidations would maximize return for the creditors.
Representatives for the parties didn't immediately respond to requests for comment.
Modell's is represented by Michael D. Sirota, David M. Bass and Felice R. Yudkin of Cole Schotz PC.
The landlord group is represented by Edward M. Fox, James S. Yu and Nascine C. Howell of Seyfarth Shaw LLP.
The official committee of unsecured creditors is represented by Jeffrey Cohen and Nicole A. Fulfree of Lowenstein Sandler LLP.
The case is In re: Modell's Sporting Goods Inc., case number 2:20-bk-14179, in U.S. Bankruptcy Court for the District of New Jersey.
--Additional reporting by Bill Wichert, Hannah Albarazi and Rick Archer. Editing by Alanna Weissman.
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