Adidas objects to Rockport's bankruptcy sale, claims it is owed $54 million
As the bankrupt Rockport tries to push a private sale through to save itself from further damage, the brand's former owner Adidas is trying to prevent proceedings, telling the court it stands to lose $54 million under the current terms of the sale.
Adidas filed an official objection to Rockport's effort to sell, telling the court "The sale of the Rockport business in 2015 required Adidas to facilitate a post-closing transition of operations in foreign markets" which took two years for Adidas to complete.
Rockport is trying to push a sale through that has been initiated by CB Marathon Opco LLC, a Charlesbank Capital Partners LLC affiliate, who has offered to buy the company for $150 million. The problem is that Adidas is the second largest unsecured creditor in the bankruptcy proceeding, which means that it may not be able to recover any of the outstanding money it is owed if the court approves the sale.
The German sportswear multinational brought Rockport under the Adidas umbrella in 2005 when it bought Reebok, the brand's parent company since 1986.
Adidas then sold the brand in 2015 for an estimated $280M to its current owners, New Balance and private equity firm Berkshire Partners LLC. Part of the terms of the sale said that Adidas would facilitate the transition for the brand and lend its expertise in foreign markets, a process which Adidas now claims cost $54 million.
Rockport filed for Chapter 11 bankruptcy protection in May. In its initial filing it listed Adidas as its second largest unsecured creditor, owing the company a total of $58 million. Rockport also listed Reebok as its third largest unsecured creditor, with an outstanding debt for $12 million.
Adidas, known for actively protecting its intellectual property rights, added in its court papers that it has not yet given consent to Rockport to use its intellectual property rights. The company clarified that it does not object to the sale of the company in itself and actually wants to work together with Rockport, but it does have issues with the current terms proposed to the court.
Rockport has since opened an adversary suit against Adidas AG and Reebok International Ltd. in an to attempt to shut down Adidas' claims. Neither Adidas nor Reebok have filed an official reply as of yet.
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