The scenario played out this week that led to the liquidation of Joe's could happen to another prominent sporting goods store in a few months.

By Greg Stiles

For the Tidings

The scenario played out this week that led to the liquidation of Joe's could happen to another prominent sporting goods store in a few months.

But Sportsman's Warehouse founder and Chief Executive Officer Stu Utgaard says he's pulling out all the stops to avoid that end.

Last month, Sportsman's Warehouse, based in Midvale, Utah, filed for Chapter 11 bankruptcy protection, giving it time to reorganize and address debt issues.

Utgaard said Thursday he isn't about to see his last 29 stores — including Medford's — go down without a fight and hopes to keep the company alive.

"Since they changed the bankruptcy laws in October 2005, there has never been a retailer that didn't turn into a Chapter 7 — total liquidation to the walls," Utgaard said. "We hope to be the first."

On a scale of 1 to 10, Utgaard rated Sportsman's Warehouse's chances of survival an 8.

Prior to filing its bankruptcy petition on March 21, Sportsman's Warehouse announced the sale of 15 stores to United Farmers of Alberta, a Calgary-based cooperative, and the liquidation of 23 others.

Utgaard pinned his hopes on a relatively strong cash position.

"We went into bankruptcy with lots of cash and have paid bank debt (to GE Capital) down a ton," Utgaard said. "By the middle of the month we will have it down to $10 million, not much in the grand scheme of things. We have an $85 million debtor in possession (loan) facility and a $125 million exit revolving line of credit lined up. We took two aggressive actions — selling the stores to UFA and liquidating 23 to pay down bank debt. We're continuing to pay it down as fast as we can to save a couple thousand jobs."

Utgaard said the company also is seeking to terminate leases at many of the closed stores, a move that could erase hundreds of millions of debt.

Rather than looking for a buyer for the company, Utgaard is looking for a new partner.

"We are trying to find an equity investor and we've got several guys we're talking to," he said.

The irony of going through the bankruptcy, Utgaard said, is the amount of money drained away by peripheral parties.

"It's a very expensive process," he said. "You have bank fees, a bankruptcy counsel, a creditors' committee and you have to pay for their financial advisers, your lawyers, bank lawyers and hire a financial adviser."

He said the Chapter 11 process will cost close to $14 million.

"We're planning to go forward and think we can be out of bankruptcy by the middle of July," Utgaard said.

Just a few blocks away from Sportsman's Warehouse near the Medford airport, Joe's Sports, Outdoor & More began transitioning toward a liquidation sale after a Delaware bankruptcy court judge signed an order allowing Boston-based Gordon Brothers Group to acquire the Wilsonville chain's $128.5 million-plus in merchandise for $61 million.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.