Golf course at Green Lakes State Park, Fayetteville, NY – Wikimedia (Nancy R. Mudrick)
Rough times for the golf industry has driven one of the world’s largest specialty golf retailers into bankruptcy court.
Weil, Gotshal & Manges business restructuring partner Michael Walsh and senior associates David Griffiths and Charles Persons are advising Austin, Texas-based Golfsmith International Holdings Inc. in its Chapter 11 case, which was filed Wednesday in Delaware. The Golfsmith restructuring is the latest engagement for Weil, which earlier this year landed roles on three other notable bankruptcy cases.
Mark Collins, chair of the corporate restructuring group at Delaware’s Richards, Layton & Finger, is serving as local counsel to Golfsmith, which is also being advised by Canadian firm Goodmans. None of the firms have yet filed billing statements with the bankruptcy court.
Golfsmith, which operates 109 stores in the U.S. and 55 in Canada under the Golf Town brand, lists debts and assets of up to $500 million each in its bankruptcy case. The company said in court filings that it would look to sell part of the chain while restructuring its business operations, a process that it expects will include shuttering some stores.
Weil previously advised Golf Town—once Canada’s largest golf retailer—on its $96.5 million merger with Golfsmith in 2012. (White & Case counseled Golfsmith on the deal.) The combined company adopted the Golfsmith name and embarked on an expansion plan that involved opening “superstores” with virtual golf simulators, putting greens and swing analyzers. But that resulted in higher operational costs, just as golf’s popularity began to roll downhill as enthusiasm for the sport ebbed following the downfall of Tiger Woods.
Nike Inc.—a major Woods sponsor—announced in August that it would stop selling golf equipment. Rival sports apparel maker Adidas AG said earlier this year that it would begin seeking buyers for its Taylormade and Ashworth golf brands.
In a declaration filed Wednesday, Golfsmith’s chief restructuring officer Brian Cejka wrote that the company had taken steps to improve its liquidity and operational performance, including accelerated lease buyouts and reducing employees. Despite those efforts, Golfsmith was not able to shrink its underperforming store base.
A joint venture formed by Fairfax Financial Holdings Ltd. and CI Investments Inc. has already offered to buy Golfsmith’s Golf Town stores in Canada. Proceeds from the proposed sale would help Golfsmith reduce its debt obligations. Court filings show that Kasowitz, Benson, Torres & Friedman and Delaware’s Hogan McDaniel are advising the joint venture on its offer for those Golfsmith assets.