I'm not exactly sure what your point is.

You spent your comment saying how you run your business and I'm glad to see you don't mislead your customers.

I will simply restate my original comment: There are many online retailers that are frauds...labeling products (that no one else seems to have) as in-stock, while in fact they are not in stock and this retail has no means or plans to get it in stock.

I am not going to give a small business a free pass just because they are a small business. Why should anyone do that?

I'd take issue with the last point. Even if the bank is fully collateralized, almost no banker want to own bikes (or property or other assets). It's a huge headache to unwind and most would prefer the company to operate on its own.

Someone on this thread said:

"Trisports received a loan to open the Tempe location, the bank decided after the opening to repeal the loan and Trisports had to file in order to close the Tempe location and reorganize the debt for that location. That's it. The Tucson store and online operations continue status quo."

That is very scary. So Trisports formed a new entity just for its new retail shop? And then leverage itself beyond being able to sustain itself? Surely this loan repeal didn't come out of thin air, right? Sounds like one of these shady cash flow dependent restaurants where a few rough months and the owner easily declares bankruptcy, walks away with plenty of cash paid out to the other subsidiaries, only to repeat the same thing somewhere else.

Take issue all you want, but I can point to my experience making these decisions directly. a) Doesn't sound like you understand Chapter 11. b) Banks prefer to get repaid and they don't wish to have classified assets sitting on their books. c) In this case, the bank clearly understood the company was likely going to need to file BK if they didn't provide relief.

Repealing (part) of a loan is exactly what a bank did to me and a friend of mine a couple of years ago though...And we didn't have the financial resources to fight them.
That little joke cost me $100k since I decided to pay my debts rather than file for bankruptcy. Note that there was nothing on our end that changed, they just decided to
lower the amount unilateraly, which meant we didn't have enough to start the business (after signing for the lease, paying the architect etc...)

So, YES, it happens. Some banks have power. And they will fuck you if they can.

It's a pretty common story for retailers. Strong flagship(s). Looking to expand. Either opens up in the wrong spot or wrong market. New lease and losses chew up cash flow from flagship location(s). Blow a covenant. Bank reserves rights, but usually looks for owners to step up. They never do. One last warning flare by freezing line of credit. They don't budge. Boom. Acceleration process starts. Borrower files and issues press release how the bank forced them to do it. In the end the bank took the equity risk with no equity upside. Charges off loan. Owners walk away from leases and other obligations. Usually try to work with key vendors, but the lesser ones will get hosed. Repeat cycle.

Sweet....unfounded attacks on experience! Well allow me to retort.

A. Pretty sure I didn't just fall out of grad school and end up opining on a message board.
B. Obviously the bank wants to be repaid, but re-read your initial premises, just because you are fully secured with the collateral doesn't mean the collateral will actually cover the debt load....therefore, you would rather operate than have them declare chapter 11. (This was my only point from my previous post)
C. Evidently the bank believe the collateral will cover the debt, but it doesn't guarantee it and I can assure you the bank likely exhausted all other options prior to allowing this to slip into ch 11.

The deeper you go on the lender spectrum the more you need to know your documents and rights. Your note could of been a demand note, which looks no different on the surface but the banks can call it at will. No reason needed. Lowering your amount with no defaults sounds more corporate card related, which is something the banks can do. The more aggressive the lender, the more you have to know your documents. Trisports was a multimillion business and in BOW's small business group. Their rules are more traditional versus what I mentioned above. It's pretty clear what happened here, no matter what their press release says.

Possibly...I am not very business savvy (as you could tell)...but the bank totally screwed us on this thing. But because we could pay back the incurred debts ( of a business that didn't even start...) we decided to not take the easy way out even though we were in no way responsible. Needless to say I will never bank with this bank and when I bought my home, I asked that the smaller mortgage co. not sell to this bank and had a clause added to that effect.

Agree with saltman on this, in my business (Real Estate), I see banks do pretty stupid stuff in regards to foreclosures...

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I *heart* weak, dumb ass people...

Hey, Jay! :-)

You will notice that I had "quotation marks" around press release, which I hoped would express my doubt about the document in question. However, I did come to ST first upon hearing rumors of financial troubles and was surprised to NOT see anything here. Whether or not ST accepts "press releases", it seems that this is pretty big news in the industry and I expected to find facts, and perhaps analysis, on the pages here.

I am deeply troubled by the issues facing TriSports.com.......many years of association and representation are not so quickly forgotten.

G

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It's a little like wrestling a gorilla.........you don't stop when you're tired.........you stop when the gorilla is tired.

Yup. No disrespect to trisports (not piling on), but I tried to use my usat discount a couple of times and discovered better prices elsewhere without the 'benefit'. So, yet, kinda of misleading advertising in USAT's part. I mean, you get the discount(presumably) but the resulting price isn't useful.

Yes, as a banker being fully secured, we have preferred bankruptcy filing. It's usually when we've had a borrower that is
unwilling or not capable of bringing additional equity or doing anything else to get us repaid in a timely manner. At least through the bankruptcy court you can get movement towards a resolution, although typically at a snail's pace. So yes from personal experience there are times when a banker would prefer a bankruptcy filing.

I'm not going to post my resume, but I have worked with special assets and after I left corporate banking, I was hired as a third party consultant either by the bank, the FDIC or SEC to help banks with criticized assets, capitalization, or whatever other issue they had going on. I've helped clear two banks from C/D orders and I've been an expert witness in court for banks when it comes to liquidating commercial assets.

To think a bank prefers bankruptcy, even when fully collateralized, is absolutely ridiculous. I can't imagine sitting in a meeting and recommending we put this client into bankruptcy because we are fully collateralized. If any of my lenders said that, I'd show them the door. I've liquidated multiple commercial businesses and it was the LAST thing I wanted to do (even though I was fully collateralized).

A blown covenant is not going to accelerate a loan into default. Every single one of my clients have covenant mitigation clauses. The community banks I worked with did not have such wording, but once I was done with them they did. You blow a covenant, you must pay $x until the covenant is in compliance. It takes multiple episodes of blown covenants to accelerate a loan. What the bank doesn't want to do is downgrade the loan because once that happens, loan loss reserves increase, which means profits decrease. If a client blows a covenant, and it's temporary, no biggie. Lender signs off on it (or whoever has to approve it). If it's a bigger issue, then the lender reevaluates if the covenant makes sense. Again, the LAST thing we want to do is trip the mitigation clauses, which could result in a downgrade. Just about every community bank I consulted didn't really know how to handle blown covenants. They'd stick some officer memo in the file about how they discussed the issue with the client, yada yada yada. They bring me in, and I change all that. Some of the most intense battles I had as a consultant was downgrading commercial loans. Thankfully I was either hired by the board or the regulators so what I said went.

Anyways, the point is that banks don't just call a loan because they want too. Something else is happening to cause the bank to take action. Banks make their money on interest income. Why would they want to call a loan, thus lose that interest income? There's more to the story.

I have seen a bank exit an industry. I was hired to get a small community bank out of tool and die industry. They had a lot of great relationships, but some executive somewhere said they don't want that industry any more. Even with that, we didn't call loans. We certainly didn't renew loans, but we (I) worked with their clients to transition them to their new bank. It was a smooth process and the bank did get out of the industry.

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The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

You mention business liquidation, my experience is in RE, my statement about banks doing stupid things still stands.

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I *heart* weak, dumb ass people...

gail, you'll read our comments - my comments - here.

i have known about this for some time, but the way i knew about it was because seton alerted me to it. i did not write anything because he alerted me to it while extracting from me a promise not to write about it, or talk to anyone, until chapter 11 was filed. the news was not a shock to me, in fact i pretty much expected it, because of things i write in the article referenced above.

that established, the wait of a few days was due to a couple of things. first, i wanted to hear back from some of trisports vendors. second, i spent the last week tiling my kitchen, and while my lovely and talented wife made all of our backsplash accent tiles (she's a potter) they're all in various shapes and sizes and i spent a lot of time making strange and arcane miters and cussing a lot as well. so, between cutting tiles, tiling, grouting, etc., and waiting to hear from vendors, well, things just got a bit sideways.

i wouldn't let anyone else on our team write about this, because whatever it was we were going to write i wanted to write in a way that sort of threw a net over this: what is the debt? at least the debt that the bank is calling. and then there is some background to bring us up to where we are right now. this filing isn't just a bank calling a debt. there's more to it.

and, then, if the vendors weren't going to ship any more, then, that's all she wrote. so i wanted to see where vendors were on this. i felt until i could take their temperature i couldn't write to slowtwitchers in any operative way, that is, should feel okay buying from trisports or not?

so, there you go. for what it's worth. pics of the kitchen to follow.

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Dan Empfield
aka Slowman

Slowman, I just read your notes. Good stuff. Your insider experience and accessability are truly value added to the already valuable resource that is ST.

Trisports has gotten a lot of my money over my short 5 years in triathlon and will continue to get my money.

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The secret of a long life is you try not to shorten it.
-Nobody

Solid write up. However, your "largest airlines and auto companies" bankruptcy comparison made me giggle given how poorly run both industries have been run for many years. Not sure if that was a kidney shot or a simple example. Either way, nice summary.

TriSports got sucked into the pre-2008 bank will give you powerball money and made classic stupid business decisions of expanding too fast and too big at the wrong time buying crazy amounts of inventory when the rest of LBS where going the opposite direction. They are mostly an online business...why invest in a crazy building in an awful industrial area that you can't ride too with every environmental bell and whistle that any expert will tell you takes years to recover. They used to be in a hole in the wall closet on the outskirts that you could not find. In addition, they have a reputation in the community and within the industry of crappy in store service with attitude unless you are a big name. I've also experienced lack of customer service/interest with their phone reps. Ironic, sense most of the employees are age groupers or friends of the owners and probably couldn't change an inner tube. They made their money on the baby boomer tri explosion in which 99% of those customers couldn't change an inner tube either and because they read an article in a magazine that $3,000 wheels or a $14,000 bike is going to make them an athlete they whip out their platinum card.

Sadly not many people left who will get this.

From past experience I bet the deals have already been had!
Sounds like there is a common denominator here.
BikeSport Michigan
Trisports Tuscon
Next
Felt Bikes? It to bad I really like my Felt Bikes.
When are people going to get sick of TD boasting about himself and screwing over customers.

n


TD was based in Tucson but the store in Tempe was the problem.

So...two months later a thread gets revived to bash an employee that had left long before the Tempe store and that fallout occurred?

Let me guess, you got screwed on product and hold a grudge.

John

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Top notch coaching: Francois and Accelerate3 | Follow on Twitter: LifetimeAthlete |

Ummm, pretty sure he didn't revive the thread. Someone else revived it, not saying a thing about the employee, and this person happened to chime in with said bashing. Sounds like you're just as quick to bash...