Should you trust someone who’s broke to hold on to your stuff and sell it for you? Suppliers to the bankrupt Sports Authority decided that they didn’t, and filed lawsuits to keep the retailer from selling winter sports merchandise and cold-weather gear and to get it back. Now they’ve reached a settlement over the merchandise… now that winter is over, naturally.

The Denver-based sporting goods chain announced when it declared bankruptcy last month that it would close and hold liquidation sales at 140 stores. It planned to keep the rest open while it either reorganizes in Chapter 11 bankruptcy or finds a buyer to take the remaining stores over. The suppliers who were selling winter gear on consignment had a problem with this, and demanded their merchandise back.

Sports Authority proposed that it would sell the merchandise and hold the money in escrow until later in the bankruptcy proceedings, but the suppliers didn’t like that arrangement, either. The retailer sued its suppliers, pointing out that losing that merchandise would be “devastating,” and now has proposed a solution that could work for everyone: Sports Authority offered suppliers 60% of whatever they make selling this merchandise.

That might not be a lot of money, considering that we’re talking about things like hats, gloves, and ski gear that are out of season now. The bankruptcy judge will decide whether to approve the proposal at a hearing this afternoon [PDF].

Sports Authority Reaches Settlement With Suppliers [Wall Street Journal]
Sports Authority Just Got Some Good News After Going Bankrupt [Fortune]

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