Englewood-based Sports Authority early Wednesday morning filed for Chapter 11 bankruptcy, hoping to reorganize its operations and reduce its $1.1 billion debt, according to court documents and an interview with CEO Michael Foss.
In a statement issued in conjunction with the filings — which were made under Sports Authority Holdings Inc., TSA Stores and Slap Shot Holdings Corp. — the company said it has identified two distribution centers and 140 of its 463 stores for closure in the coming months.
The company expects to let go about 3,400 of its 15,000 employees as the stores and distribution centers close, Foss said in an exclusive interview with The Denver Post. The affected workers were notified on Feb. 10.
"We wanted to give them plenty of time to find their next opportunity, whether it's in the company, or wherever else it is," Foss said. "It is hard to close a store or a distribution center, or right-size a corporate headquarters. We try to mitigate the impact on people as much as possible."
In January, about 100 employees, mostly in its corporate headquarters were let go, but Foss he hopes to retain Sports Authority's remaining 2,400 Colorado workers.
The court still must approve store-closing sales.
Under court approval, the majority of those stores could begin closing sales as early as Friday, Foss said. A "small subset" of the 140 could remain operational, if the company is able to renegotiate leases.

The store-closing process is expected to take two to three months, he said.
Although the list of the stores affected was not immediately available, officials said only three Colorado locations will shut down: the Sports Castle, at 1000 Broadway in Denver, the Arapahoe store at 9000 E. Peakview Ave. in Greenwood Village, and the S.A. Elite store at Twenty Ninth Street Mall in Boulder, where closing sales began last month.
Sports Authority plans to exit markets such as Texas, Virginia Beach, Puerto Rico, Kansas City and Omaha, Neb., Foss said.
Sports Authority inherited an "inefficient store network" via past mergers and acquisitions.
"If you sit back, we're the product of a merger of about five major sporting goods retailers over time," he said.
That left the company with a hodgepodge of stores that ranged in size, look and feel. By 2006, when stores were converted to operate under the common brand of Sports Authority, the company also had several stores clustered in the same trade area.
"We have some inefficiency in the system and that's hurt us from a sales and profitability point of view," he said.
The company is trying to find the appropriate mix between brick-and-mortar locations and e-commerce penetration, he said.
"We're trying to skate to where we think the puck is going to be," he said.
Sports Authority also secured $595 million in debtor-in-possession financing to provide liquidity during the process, company officials said in the statement. The Wall Street Journal, citing unnamed sources, reported Tuesday that Sports Authority could end up shuttering all its stores if it does not meet the conditions of its bankruptcy financing.
In the bankruptcy filings, the company listed assets in the range of $500 million to $1 billion and debts greater than $1 billion.
Sports Authority is approaching Chapter 11 in dual tracks: Try to reorganize and get the company's debt and cash at appropriate levels and emerge from bankruptcy a more nimble and less leveraged firm; and evaluate the business and its assets for a potential sale or outside investment, Foss said.
Sports Authority, the fourth-largest U.S. sporting goods retailer, has been struggling to adapt to a changing sales environment that is increasingly dominated by online sellers, like Amazon, and specialty stores, like Lululemon Athletica.
In the prepared statement, the company said it intends to use bankruptcy to improve operationally and financially so that it can be competitive.
"Without the boat anchors of some of the inefficiency we have in store networks, and with a right-sized cost structure, " Foss told The Post, Sports Authority becomes "a very different beast."
Sports Authority also asked for court authorization to continue paying employees and continue customer loyalty programs, such as The League.
This story is developing and will be updated.
(via denverpost Alicia Wallace: 303-954-1939, awallace@denverpost.com or @aliciawallace)
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