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Judge bars Performance from promoting sales as 'Store Closing' events

Published December 4, 2018
Bankruptcy court also rules on customer return policies.

DURHAM, N.C. (BRAIN) — A U.S. bankruptcy judge has ruled that a liquidator company may not promote sales at some Performance Bicycle locations as "Store Closing," "Going Out of Business," "Liquidation Sale," "Bankruptcy Sale" or similarly themed sale events. While the sales may continue, those kinds of signs are not allowed.

The ruling by Judge Benjamin A. Kahn applies to the 62 additional stores where Gordon Brothers Retail Partners began operating sales on Saturday. The company also has been operating sales at the 40 other Performance locations since about Nov. 16, when Performance's parent company, Advanced Sports Enterprises, filed for Chapter 11 bankruptcy.

Kahn said Gordon Brothers and ASE are permitted to promote the sales as "Holiday Sale," "Inventory Clearance Sale" or "Christmas Sales."

ASE's CEO has told BRAIN that none of the sales should be seen as a direct indication that specific stores will close, although he expects that many locations ultimately will shut down.

"Currently, this is more about inventory liquidation rather than store closure," Pat Cunnane said in an email to BRAIN. "Whether a store is ultimately closed is a function of concessions that we may obtain from landlords and the marketplace of potential bidders. This process will enable us to determine which stores are the most valuable to the business."

Kahn also barred Gordon Brothers from supplementing the inventory at the Performance stores with additional merchandise of its own. And he clarified how Gordon Brothers and store employees should deal with customers looking to return items they bought before the Nov. 16 filing, or gift certificates purchased before that date.

He said Gordon Brothers must accept gift certificates and gift cards issued before the filing and must accept returns of products bought before the filing, under the same policies in effect when the item was purchased, as long as the customer is not repurchasing the same item to take advantage of the new discounts. 

Kahn said that all sales made after the bankruptcy filing are considered "as is," but noted that the stores must comply with state and federal laws that require the stores to accept returns of any goods purchased during the sales that "contain a defect which the lay consumer could not reasonably determine was defective by visual inspection prior to purchase for a full refund, provided that the consumer must return the merchandise within seven days of purchase, the consumer must provide a receipt, and the asserted defect must in fact be a 'latent' defect."

He told Gordon to post signs near cash registers stating that "Refunds may only be for merchandise having a latent defect, when returned within 7 days of purchase." 

Kahn's interim order on Monday will be in place at least until another hearing is held on Dec. 6. 

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