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Prince Sports seeks fresh start in Chapter 11 bankruptcy

Chicago experienced a wave of unseasonably warm weather in the late winter and early spring, and many residents may have used the opportunity to take to the tennis courts early. Just as the weather is gradually improving here, the prospects for tennis equipment company Prince Sports, Inc. are getter better after it filed for Chapter 11 bankruptcy this week.

The company's bankruptcy petition reveals that it has a high debt load. It owes over $10 million to its suppliers and $65 million to a company named ABG-Prince LLC. Those debts stand against assets valued between $50 and $100 million. The debt to ABG-Prince is secured debt, a classification that is very important in a bankruptcy proceeding. Secured creditors typically receive more in a bankruptcy.

Prince expects to emerge leaner from Chapter 11 and has plans to revamp its business model. Part of the restructuring may involve a change in control of the company, however. Because ABG-Prince is a large secured creditor, it has offered to forgive the $65 million debt if it receives complete ownership of Prince. Part of the reorganization process can involve aspects germane to the law of corporations, such as the issuance of new equity.

The company's CEO expressed confidence that the bankruptcy process would provide Prince with the fresh start it needs to obtain a more competitive position in its market and perform better going forward. The company makes clothing and equipment related to racquet sports including tennis, racquetball and squash. It has been in business since 1970. .

Source: Reuters, "Tennis racquet maker Prince Sports files for bankruptcy," Tanya Agrawal, May 1, 2012.

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