The Rockport Group filed for Chapter 11 bankruptcy protection in a Delaware court yesterday, citing numerous issues including a promotional environment, weak sales at the company's current 22 full-price Rockport stores in North America in recent years and a difficult and expensive separation process from the Adidas Group.
A private equity firm, Charlesbank, put in a “stalking horse bid” for the group as part of the bankruptcy filing. It pledged to pay $150 million cash, with a contingent warranty on its equity and an application to provide $80 million worth of debtor-in-possession (DIP) financing. Reportedly, Charlesbank is primarily interested in Rockport's stores.
The petition set a June 29 deadline for the reception of competiting offers, with a closing on July 27. Since last December, the business had been marketed to about 110 potential bidders by Houlihan Lockey, which then signed 60 non-disclosure agreements. Six of them met with senior Rockport managers to help form a bid.
The Rockport Group includes the Rockport brand as well as Aravon, a women-oriented brand of comfort shoes, and Dunham, which is more outdoor-inspired. Both of those brands were contributed to the group by New Balance when the company acquired Rockport from Adidas in August 2015, together with a Boston-based investment company, Berkshire Partners.
The two paid $280 million for the Rockport brand at the time. Rockport's systems were deeply integrated with those of Adidas, particularly in Europe, and it took time to extricate them. Finally, late last year, after the separation was completed in November, Bershire and New Balance decided to sell their interest in the Rockport Group for $188.3 in notes to to another group of investors that immediately began to explore a reorganization of the activities because of the numerous problems that had arisen.
Among those problems, the closing of three contract factories in October 2016 caused delays in deliveries until the release of the autumn 2017 collections, forcing the group to use faster and more expensive shippîng methods. Furthermore, the group ran into a contract dispute with a third-party North American distributor, Expeditors.
The bankruptcy petition lists about $287 million in debts. Adidas and Reebok are among the major creditors at $58.1 million and $12.5 million, respectively.