Athlete's Foot files for Chapter 11 bankruptcy protection

<p>Sneaker retailer Athlete's Foot Stores LLC filed a voluntary Chapter 11 petition Thursday in the U.S. Bankruptcy Court in Manhattan, according to court papers.</p><p>The Kennesaw, Ga.-based sports shoe chain listed assets of $33.6 million and liabilities of $39.4 million.</p><p>Athlete's Foot's largest unsecured creditors are New Balance Athletic Shoe Inc., which holds a trade claim of $1.4 million, and K-Swiss Inc., another sneaker maker with a trade claim of $1.3 million.</p><p>Calls to Athlete's Foot were not immediately returned Thursday.</p><p>Court papers said the company recently obtained a $20 million credit agreement from GMAC Commercial Finance LLC.</p><p>But on Nov. 30, GMAC told Athlete's Foot it would no longer extend credit under its prior financing deal, leaving Athlete's Foot without available cash. The cash crisis, combined with its inability to meet ongoing operations, spurred its decision to seek bankruptcy protection, Athlete's Foot said.</p><p>The cash crunch prevented Athlete's Foot from getting products to its stores, reduced inventory and increased markdowns on merchandise. Court papers also said the store had trouble stocking the most popular styles of footwear, which led to declining sales in its retail outlets.</p><p>Athlete's Foot is working on a preliminary business plan that would sell off all of its inventory, and will seek a buyer for its other properties such as furnishings, fixtures and leases. Court papers said any leases that cannot be sold will be rejected. Athlete's Foot said this plan will bring the best recovery for its creditors.</p><p>The company will continue to operate while it pursues an orderly liquidation of its assets. Court papers also said the company and GMAC have agreed on the terms of a debtor-in-possession loan package, but details weren't included in papers submitted to the court.</p><p>The company will be represented in its bankruptcy case by John H. Drucker of Angel & Frankel, P.C. in New York.</p><p>At the time of its bankruptcy filing, Athlete's Foot said it operated about 125 retail stores in 25 states. The company's trademark name is also used by several hundred locations that are independent franchisees, which aren't involved in the current Chapter 11 case.</p><p>The privately held company reported a loss of $21 million on revenue of $172 million in its last fiscal year.</p>

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