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Updated 7:30 a.m. Wednesday with names of more skateboarders whose contracts are being rejected and a mention of an Active operating agreement with ESPN for an e-commerce partnership.
I drove out to Riverside this morning and got a copy of Active's Chapter 11 bankruptcy filing in federal court.
The filing tells how Active's rapid expansion over the past few years required significantly more investment and financial resources - while revenues essentially stayed the same.
As result, Active is projected to record a $7.7 million loss for the fiscal year ending March 31. (Click here to read an interview with Active partner Shane Wallace about the bankruptcy filing and go-forward plan, which includes reorganizing and continuing to operate 21 stores).
Also of note is the list of Active's 20 largest unsecured creditors, which reads like a Who's Who of action sports brands. Active owes a total of $8.8 million to its 20 largest unsecured creditors.
Interestingly, only one brand is on the list of secured creditors - the Burton Corporation. Secured creditors get payment priority in a bankruptcy.
According to the bankruptcy filing, Active's revenues stayed approximately the same over the last few years while the number of stores essentially doubled in that same period.
3/31/07: $58.9 million
3/31/08: $61.8 million
3/31/09: $59.9 million (projected)
3/31/08: ($2 million)
3/31/09: ($7.7 million) projected
The filing says, "These losses have been caused primarily by the Debtor's rapid over-expansion and market saturation, during which time the company's same store sales were decreasing substantially."
Active owes approximately $4.2 million in principal, exclusive of interest and other charges, to Merrill Lynch, which is continuing to work with the company during its bankruptcy reorganization.
The company is moving to reject eight leases for the stores it has already closed in Irvine, San Diego (three), Simi Valley, Westwood, Lake Elsinore and Mission Viejo.
The filing also says it will reject contracts with several skateboarders, including Andrew Reynolds, Kenny Anderson, Billy Marks, Erik Ellington, Daewong Song, Steve Berra, Eric Koston, Michael Capaldi, Braydon Szafranski and Jim Greco.
In addition, Active is rejecting an operating agreement with ESPN for an e-commerce partnership.