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Modell’s Seeks Bankruptcy Proceedings Pause, Citing Temporary Store Closures

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Modell’s Sporting Goods is seeking to further delay its Chapter 11 bankruptcy proceedings due to COVID-19 shutdowns that are preventing the retailer from holding the liquidation sales needed to generate cash, according to Law360. The original deadline provided for the company’s initial March filing has already been delayed by 30 days, but Modell’s wants the hold to last until May 30.

The retailer noted that social distancing and shelter-in-place orders “continue to prevent the debtors from conducting retail sales at their various locations” in a letter to U.S. Bankruptcy Judge Vincent F. Papalia. Creditors will have until April 24 to file objections, and a telephone hearing is scheduled for April 30.

Papalia already acknowledged the possibility of an extended pause due to the “uncertainty on top of uncertainty” caused by the health crisis, but the delay has attracted pushback from Modell’s landlords. They object to a budget plan that has delayed rent payments until August and are appealing the order granting the original pause.

Modell’s liquidated 19 of its 153 locations before shuttering its stores due to COVID-19. The company reported “beyond spectacular” returns from the efforts, and expressed confidence that continued liquidations would maximize returns for its creditors.

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