If you’ve received any gift cards from Sport Authority, it might be a good idea to go ahead and use them now.
The sports superstore announced Tuesday that it’s filing for Chapter 11 bankruptcy and undergoing a dramatic restructuring. It also said it plans to sell or close 140 of its 463 locations across the U.S. and Puerto Rico, and close distribution centers in Chicago and Denver.
Though bankruptcy protection offers companies a new beginning, it does not guarantee a company’s survival. Sports Authority is planning to sell many of its assets or pursue a massive debt restructuring plan, after failing to keep up with consumer trends.
Sports Authority CEO Michael E. Foss commented in a statement, ‘We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry. We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations.’
In bankruptcy restructuring, a company can be sold to competitors, to investors or to a company that will sell its remaining assets for the most money.
The company has received ‘strong interest from third parties interested in buying some or all’ of Sport Authority, according to Mr. Foss.
Why you should go ahead and use your gift cards for Sports Authority — or anywhere, for that matter
Though Sports Authority said customers will still be able to use gift cards, bankruptcy experts recommend to spend gift cards from retailers that are filing for bankruptcy as soon as possible. Why? Those gift cards can become completely devoid of any value if the restructuring becomes a liquidation.
A lot of retailers are in serious world of hurt right now, and though many people believe it’s due to the rise in online sales, there are a host of other reasons retail is going through such a seismic change.
One reason is that America is over-stored, meaning the amount of space we have devoted to retail is very high, especially compared to other countries. So it follows that there will be a natural shakeout of retail on the way.
In addition, Americans have decided experiences are more valuable to them than acquiring ‘stuff.’
Read more: Sell your unwanted gift cards online
Other retailers on the verge of bankruptcy
According to Fool.com, Quiksilver, Columbia House, Radio Shack, The Wet Seal and American Apparel sought bankruptcy protection in 2015, trying to stabilize themselves after walking on shaky financial ground.
Read more: Clark’s no-giftcard gift certificate