Golfsmith International, Inc., a specialty golf retailer with 109 Golfsmith stores across the U.S. and 55 Golf Town stores in Canada, filed for Chapter 11 bankruptcy protection in Wilmington, Delaware on Wednesday, September 14, 2016. This case follows other large sports retailer bankruptcy cases, including Sports Authority and Eastern Mountain Sports, who both filed Chapter 11 proceedings in Delaware earlier this year.

Landlords should be particularly wary. According to papers filed with the Bankruptcy Court, Golfsmith cited that its profitability has been adversely impacted by outsized occupancy costs at its stores. To remedy that problem, Golfsmith has targeted 20 stores for closing in its first day store closing procedures motion. These 20 locations are alleged to be underperforming and operating under long-term, above-market leases in oversaturated markets. In the motion papers, Golfsmith states that it may seek authority in the future to apply the closing procedures to additional stores.

One of Golfsmith’s reorganization strategies will be to renegotiate leases with over-market terms to reduce its occupancy expenses.

As a landlord or other trade creditor in Golfsmith’s Chapter 11 case, it is critically important to know your rights and deadlines to assert those rights in order to mitigate risk and enhance recovery.

For more information regarding the Golfsmith bankruptcy case and how Stark & Stark can assist you, please contact either Tom Onder at (609)219-7458 or or Joe Lemkin at (609)791-7022 or Onder and Lemkin write regularly on commercial real estate and trade creditor issues and are members of ICSC. Mr. Onder is Chair of the 2016 ICSC PA/NJ/DE Next Generation Committee.