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Will Sports Authority get KO'd in court fight with vendors?

Written by George Anderson
Sports Authority and many of its vendors have a case of the "sue me, sue you blues." According to a Wall Street Journal report, the bankrupt sporting goods chain has filed countersuits against more than 160 vendors. The suppliers are seeking the return of their consigned merchandise rather than see the goods sold off in liquidation sales at 140 stores Sports Authority is in the process of closing. Earlier this month when Sports Authority filed for Chapter 11 protection, it was granted permission to continue selling consigned goods under the provision that it put the sales proceeds into escrow. Some vendors, however, are concerned that Sports Authority will pay banks first and that, in the end, they will be shortchanged. Sports Authority argued in court this week that its business would be decimated if it were forced to stop selling the consigned products. The footwear and other products in dispute are valued at $85 million, according to the Journal's reporting. Having heard the retailer's arguments, a judge presented Sports Authority with three choices for moving ahead:
  1. Comply with vendors' requests and return merchandise;
  2. Return to the original agreement between the parties and pay vendors as previously agreed;
  3. Settle with suppliers.
Sports Authority has agreed to comply with the original terms of the agreements it has with the vendors.
Photo: Sports Authority

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