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Total Hockey retail chain files for Chapter 11 bankruptcy in St. Louis

Total Hockey is a retail giant.  TJHN and the Pre Draft Combine have been doing business with Total Hockey for five years.

As one of the people who writes the checks for all the bills, I was always amazed at some of the deals Total Hockey gave our companies.  Shockingly good prices in some cases, so good in fact that I questioned how long it could last.

A few months ago I asked a friend of mine who works for a major equipment manufacturer in a very casual conversation; how could Total Hockey do what they do?  His answer was not what I expected; “They can do it because they aren’t paying their bills.  They owe us millions.”

In June, Total Hockey’s board hired Lee Diercks, a partner of Clear Thinking Group LLC and an expert on turning around stressed businesses, as its chief restructuring officer.

What Diercks said in court documents though would not lend credence to his being an expert.  Diercks said that Total Hockey’s comparable store sales were positive every quarter until the end of 2015, when sales dropped more than 8 percent in the fourth quarter. That slip continued into 2016, when comparable stores sales have been off about 5 percent.

If a business can essentially fail when losing 8 percent in one quarter and a continued trend of 5 percent loss, the business does not have enough margin to begin with.  This is a clear signal that the operations plan is not one that can move forward.

The bankruptcy filing documents state that Total Hockey has entered into an asset purchase agreement with TSG Enterprises LLC, or Pure Hockey, a Massachusetts company with more than 40 specialty goods stores. The sale would be for about $22.5 million, according to Diercks.

Such a sale may be done by auction through the Court should the Chapter 11 proceeding move forward.  This auction would take place at the end of the month if approved.

Of note, Total Hockey listed assets of $10 million to $50 million and liabilities of $50 million to $100 million in its filing.

A potential sale at $22.5 million at auction, would potentially provide creditors with a payback on debt of 25 to 50 cents on the dollar.

In a statement, Total Hockey CEO Michael Benoit listed a combination of reasons for the bankruptcy filing, including one of the warmest winters on record in 2015, adverse Canadian exchange rates, the collapse of key vendors and a difficult integration of the Players Bench Corp. acquisition last year.

A statement which at best is a mitigating excuse for what most in the hockey business see as simple mismanagement.

Joe Hughes

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