Banking on a personal guarantee signed by Sportsman’s Warehouse owners Stuart and Kimberly Utgaard on Jan. 20, 1998, Columbia Sportswear has sued the couple, seeking at least $600,000 plus attorney’s fees, for failure to pay for product.
Sportsman’s Warehouse filed for Ch. 11 bankruptcy protection on March 20, only 12 days after announcing plans to liquidate 23 stores after the company had sold 15 stores to Canadian retailer UFA to satisfy the terms of a bridge loan. (Click here to read a March 23, 2009, SNEWS® story, “Sportsman’s Warehouse enters Ch. 11 bankruptcy reorganization.”) According to the bankruptcy documents, Columbia Sportswear is among the list of the 30 largest unsecured creditors and is owed $627,689.
In court documents filed in Oregon’s U.S. District Court, Columbia Sportswear asserted the personal guaranty signed by the Utgaards, stated the defendants “unconditionally personally guarantee to Columbia Sportswear Company, as Creditor, the prompt payment, when due, of every claim, credit charge, account past due, service charge, attorney’s fees of money due that may hereafter arise in favor of the Creditor under this extension of credit.” A copy of that signed guaranty was attached as evidence.
SNEWS® View: Typically, in a Ch. 11 bankruptcy case, Columbia Sportswear would have no recourse but to stand impatiently in line with all the other unsecured creditors, awaiting whatever crumbs of reorganization money remain after the secured creditors have finished feeding. That personal guaranty though is a potential pair of aces up its sleeve and could give Columbia Sportswear a winning hand at a table full of gamblers. It will be interesting to see if any other unsecured creditors, including Garmin ($1,013,339), Coleman ($980,344), Carhartt ($655,532), Kelty ($634,532) and Johnson Outdoors ($593,335), also hold a guaranty they may try to enforce in the courts. Of course, it needs to be realized that a personal guaranty is only worth the sum of the assets secured by that guaranty. This dance, we suspect, is far from over, but at this point, the Utgaard’s toes have just been stepped on — deliberately.