Nine months after declaring bankruptcy under Chapter 11, sporting goods retailer Herb Philipson’s is up for sale in a court-guided auction, according to documents filed in bankruptcy court Wednesday.
On July 2, the company made an “emergency motion” in court for “the sale and auction of substantially all the debtor’s assets.” On Wednesday, that motion was approved by a judge.
Owner Guy Viti told the Sentinel he expects the company to sell, and that the process should wrap up by August.
“We’re trying to sell, and there’s somebody interested in buying the company, and probably extending the company back to its (pre-bankruptcy) size,” he said Wednesday. “Closing is the wrong word. We’re trying to restructure this company to remain open in this area.”
He continued: “We’re not trying to go Chapter 7, we’re not trying to go bankrupt ... The company’s really valuable for the community and really successful with the employees. I’m looking for a way to keep this company intact.”
According to Viti, the buyer would assume ownership of all the company’s stores, its name and branding, and employees. “The name’s not going to be any different — everything’s the same,” he added.
Viti said that in the event the company doesn’t sell at auction, he will continue with Chapter 11 restructuring.
“If it doesn’t (sell), I just end up keeping it ... I just put more money into it, to get out of Chapter 11,” he said. “But it’s a strong store, I think I have a buyer.”
Viti declined to name the potential buyer.
He said he filed the motion to sell after having trouble keeping the store’s inventory stocked during the bankruptcy proceedings.
“We’re just not getting enough inventory in there, these people (the potential buyers) have the inventory, but it’s up for auction so I don’t know who’s buying at this point,” he said.
Viti, a long-time Herb’s employee, purchased the company from the Philipson family in March 2018 and held a “grand opening” of the nine store chain in August.
In October, he filed under Chapter 11, citing mounting debts and falling revenue.
The bankruptcy filing came after major lender Second Avenue Capital of Needham, Mass. pulled support in October.
Since then, Second Avenue has maintained in bankruptcy court that Herb’s is unlikely to right its finances, pointing to years of declining revenue and what it calls Viti’s “shocking inability to accurately project the operating performance of the business.”
During the Chapter 11 proceedings, the company paid down “approximately $1,385,000” of its $2 million debt to Second Avenue, closed three of its nine stores and let go about 50 employees, according to court filings and statements by Viti.
The remaining six Philipson’s locations — in Oneida, Herkimer, New Hartford, Liverpool, Watertown, and the flagship store in Rome — are still open, according to Viti, though some reports indicate the Oneida and Watertown stores are not.
Herb Philipson started the company in downtown Rome in the summer of 1951.
It remained in the hands of the Philipson family until 2018, when Gary Philipson said “new energy” and a “fresh vision” were needed to lead the company into the future.