Bankruptcy concepts and applications

¶ … Joe's Sports, a 50-year-old sporting-goods retailer with stores in Washington, Oregon and Idaho, who filed for bankruptcy protection recently. The company began when "Edward Orkney, a World War II veteran, began selling Army surplus sleeping bags from the back of a station wagon in Portland" (Martinez, 2009). It grew to a chain of 30 stores with over 1,600 employees, and was considered successful until the economic downturn that began in 2008.

The company claims up to $500 million in debt, and there are several of its creditors who are uninsured and facing steep losses, such as Columbia Sportswear, another Washington company, who is owed about $888,300. They owe about $12.8 in total to all their creditors. The company did secure some funding from Wells Fargo Retail Finance so it can continue to operate and pay its employees as it attempts to reorganize and again become profitable. The President and CEO of the company, Hal Smith, "said the restructuring will give Joe's time to face its 'capital challenges so that we can emerge an even stronger company with a firm financial position'" (Martinez, 2009). They do not have a time frame for this restructuring, or it was not reported in the article, but a financial expert expects them to close low-profit stores and become "leaner and meaner" as a result of the bankruptcy.