In September of 2016, Maurice Sporting Goods (MSG), a 90-year old distribution company, announced a new, 300,000 square foot warehouse in Atlanta. First seen as a boon, the Georgia facility would be cited just one year later as a key cause in the company’s Chapter 11 bankruptcy filing.

This week, MSG hit the selling block with $100 million in debt as an army of consultants, financial advisors and banking groups prepares to restructure the company. Development Specialists, Inc.’s Chief Restructuring Officer Patrick O’Malley cited the state-of-the-art facility and the bankruptcies of major MSG customers Sports Authority, Gander Mountain and Sports Chalet as key reasons for the filing.

A failed asset purchase of MSG by Big Rock Sports in October leaves MSG in its current situation. On November 20, Illinois-based private equity firm Middleton Partners announced a pending agreement to purchase MSG, a move that secured a $150,000 expense reimbursement—should it fail— by a Delaware bankruptcy judge just one day later. If the purchase clears hurdles, MSG will be embarking on a new era as it attempts to heal wounds gouged into the fishing industry in the wake of instability.

In April, Ardent Reels filed suit against MSG following the suspension of product shipments for failure to pay. Ardent however, was not alone, as Gary Yamamoto Custom Baits filed its own suit in May. “They were having issues for about two years,” says Yamamoto V.P. of Operations Ron Colby. “I quit shipping to them twice because they weren’t paying us.”

Court documents filed in Delaware this week show that Yamamoto is owed nearly $1 million by MSG. The documents (U.S. Bankruptcy Court District of Delaware case 17-12481) also list multiple tackle manufacturers in the Top 20 debtors owed, including:

• Normark — $1.47 million
• Shimano North America —$991,181
• Gary Yamamoto—$967,174
• Pautzke Bait Co. — $838,717
• Z-Man Fishing Products — $830,478
• Gamakatsu — $814,058
• Panther Martin — $813,959
• Zoom Bait Co. — $793,413
• Sheldon’s Inc. (Mepps) — $770,687
• Hard and Soft Fishing — $747,026
• Pure Fishing (USA) — $736,750
• Pure Fishing (Canada) — $721,649
• Leland Lures — $691,889
• TTI Blakemore — $681,986
• Atlas Mike’s Salmon Eggs — $610,034
• Mustad — $566,626
• Rapala USA — $539,495

In addition to North America-based tackle manufacturers, MSG also owes $5.4 million to Missouri-based craft goods builder River’s Edge, and over $11.5 million to manufacturers in China.

A tarnished reputation

Colby says Yamamoto made the decision to forgo ICAST this year in the wake of MSG’s delinquent account, in addition to putting projects on hold that would help the bait company continue expanding overseas.

“This year, we had plans to build another massive warehouse to house our product going overseas to areas that are growing, like China. I had to pause that project. I have a pad poured and metal building frames sitting out right now because I wasn’t going to be able to pay anybody.”

According to Colby, MSG approached Yamamoto multiple times with payoff programs including a cash and carry deal, an incremental payment plan that would have paid Yamamoto in two percent increments over a three year period, and eventually stock options in MSG itself. Colby says his company had no interest in any of the arrangements. “They were our supplier to Walmart,” he adds. “But Walmart wasn’t getting our product.”

On April 12, 2017, MSG announced an extension of its credit facilities with BMO Harris Bank, ThePrivateBank, and First Midwest Bank. It was then, Colby noted, that manufacturers stopped receiving payments from MSG and started receiving checks from the banks.

“I wasn’t comfortable with that,” Colby says.

What does the future hold for Maurice?

With facilities in six U.S. cities, MSG legal counsel is pulling out the stops in bankruptcy court to save American jobs. A failed asset purchase of MSG by fellow distributor Big Rock Sports in October leaves MSG in its current position. That deal; however, did not include MSG’s $100 million in debt. Now, MSG will seek to levy jobs and the buying power of Middleton Partners for a second shot at survival.

“The debtors are here today, really, seeking a second chance to maximize value for a going-concern sale,” MSG counsel Robert S. Brady of Young Conaway Stargatt & Taylor, LLP, told the Wilmington, Delaware court. “It’s a second chance to save a 90-year-old business, a second chance to save jobs.”

With a buyer already lined up, and $20 million in debtor-in-possesion funding secured through the Bank of Montreal (including $5.5 million for Spring 2018 inventory), it’s likely that MSG will survive this Chapter 11 filing. However, how quickly they can repair industry relations remains to be seen.

Editor’s notes: MSG subsidiaries South Bend Sporting Goods Inc., Danielson Outdoors Company, Inc., Triple Crown Holdings, Inc. and Matzuo America are also included in the MSG Chapter 11 filling. MSG operates facilities in Seattle, Washington; Reno, Nevada; Denver, Colorado; South Sioux, Nebraska; St. Claire, Missouri; Pittsburgh, Pennsylvania.; Mississauga, Ontario, Canada; Miami, Florida; Bentonville, Arkansas; and Shanghai, China.