Vestis Retail Group, the parent company of Eastern Mountain Sports, Bob’s Stores and Sport Chalet, initiated voluntary reorganization proceedings under Chapter 11 and proposed the sale of EMS and Bob’s to funds advised by Versa Capital Management, which would acquire substantially all of the remaining assets of the company. The agreement with Versa, which will be subject to court approval, seeks to position EMS and Bob’s to maximize future opportunities.

Vestis has secured a commitment for up to $125 million in debtor-in-possession financing from its existing lender, Wells Fargo Capital Finance, which combined with cash from existing operations, will help ensure the company is able to meet its financial obligations throughout the process.

“When Vestis first acquired EMS and Sport Chalet, each company faced significant operational challenges and was on the verge of liquidation. We have made significant progress in stabilizing the businesses and improving overall performance across all our brands,” said Mark Walsh, CEO of Vestis.

“As a result, EMS and Bob’s are now delivering solid performance but have been burdened by limited financial flexibility due, in part, to the unique competitive pressures facing Sport Chalet. After reviewing a variety of strategic alternatives, we determined that the best path forward is to separate the businesses and confront the challenges that have been hindering our overall progress. We are confident EMS and Bob’s will be well-positioned to thrive at the conclusion of the process.”

As part of the planned transition, Sport Chalet began store closing sales on April 16, 2016 at all locations, while EMS and Bob’s began closings at nine locations (eight EMS and one Bob’s) where unfavorable real estate costs have prevented the store from achieving sufficient profitability. The balance of the EMS and Bob’s lease portfolio will be evaluated for efficiencies as part of the company’s broader efforts to strengthen its financial performance.

Vestis was advised in this transaction by Klee, Tuchin, Bogdanoff & Stern, Lincoln Partners Advisors and FTI Consulting.