21 December 2020
Former Operator of Sporting Gear Maker Schutt Sports Files for Liquidation
WSJ Pro
Aisha Al-Muslim
Kranos Corp. used to do business as Schutt Sports, the manufacturer of products used by the NFL and MLB
The former operator of century-old sports-equipment company Schutt Sports Inc., which signed a deal in 2018 to supply bases, home plates and pitching rubbers to Major League Baseball, is planning to go out of business after selling its assets and filing for bankruptcy.
Kranos Corp., which previously did business as Schutt Sports, a leading U.S. manufacturer of protective sports equipment and aftermarket reconditioning services, filed for chapter 7 Friday in the U.S. Bankruptcy Court in Wilmington, Del.
Schutt will continue operating under new ownership after Innovatus Capital Partners LLC acquired the assets through a foreclosure sale earlier this month for an undisclosed price, according to Ravi Bhagavatula, a partner of Innovatus.
“The brand is going to live on,” Mr. Bhagavatula said Monday. “We are going to take over the business.”
The remaining entity of Kranos is liquidating after considering its financial and operational conditions and strategic alternatives, according to court papers. Kranos valued its assets at $1.22 million and listed its total liabilities at $58.34 million.
Robert Erb, the chief executive of Kranos, declined to comment about the liquidation of what remains of the holding company and the foreclosure sale of Schutt.
Innovatus Capital controls Kranos, with a nearly 20% stake, court papers show. The New York-based investment adviser and portfolio management firm provided an $18 million secured term loan to Kranos in October 2019 to help invest in the operations expansion of Schutt.
Under the ownership of Innovatus Capital, Schutt will get additional capital to stabilize the operations, launch new products, pursue new business ventures, fund working capital growth and expand into new markets, Mr. Bhagavatula said.
Founded in 1918, Litchfield, Ill.-based Schutt develops football, baseball, and softball equipment. Schutt is the official supplier of bases, home plates and pitching rubbers to MLB, manufacturing the Jack Corbett Hollywood bases, a version of which has been on the field for every MLB game, including World Series and All-Star Games, since 1939.
Earlier this year, Innovatus acquired the assets of high-tech football helmet startup Vicis, which went into receivership last year. Innovatus will leverage the strength of Vicis and Schutt to offer sporting goods in the marketplace, Mr. Bhagavatula said.
Schutt claimed that more than 35% of National Football League players wear its products. In addition to helmets, Schutt makes shoulder pads, chest protectors and equipment. The company said it was also the largest domestic maker of batting helmets in the U.S.
Platinum Equity LLC, founded by billionaire Tom Gores, had acquired substantially all the assets of Schutt out of bankruptcy in December 2010 for about $33 million.
Platinum then sold Schutt via management buyout in 2018, a spokesman for the Los Angeles-based private-equity firm said Monday.
Schutt previously filed for chapter 11 protection in September 2010, in part to halt a legal action by rival helmet maker Riddell Inc., which accused Schutt in 2008 of selling football helmets that infringed upon Riddell’s patents.
Although Schutt denied the allegation, a judgment awarding Riddell $29 million was entered in August 2010. In 2011, Schutt’s bankruptcy estate reached a deal to put to rest litigation with Riddell over the patents.
Kranos has hired law firm Bielli & Klauder LLC to represent the company during its chapter 7 case. Judge Brendan Shannon has been assigned the case, number 20-13144.