Previously, we wrote about the permanent closure of Sportslink, the iconic Singapore homegrown brand that grew from a single store at Queensway Shopping Centre to over 35 outlets in 2015:
Previously, many thought it could be Covid-19 that did them in.
Well, it might not be. Or it could be the final straw.
Sportslink’s Financial Difficulties Allegedly Started Since 2018, Owing both Adidas & Brooks Over $2 Million
On 9 Jul 2020, the Business Time reported that Adidas brought the retailer to court over the overdue payment of S$1 million in trade payables.
It was added that Sportslink, which is at least S$3.4 million in debt, did not oppose the move when ordered to wound up (read: close down).
It was also revealed that the sports retailer has been having financial difficulties since 2018.
The Timeline
Apr 2018
Sportslink’s financial difficulties became acute (severe).
According to the director of Adidas Singapore, Sportslink had failed to S$1.3 million to Adidas Singapore in trade payables.
Sportslink then paid a fraction of its debt but could not follow through with the repayment.
Nov 2019
Sportslink has owed Adidas Singapore S$991,000.
Adidas Singapore served a demand letter to Sportslink for immediate repayment.
Sportslink failed to pay Adidas Singapore.
Adidas Singapore applied to have Sportslink liquidated.
Between Nov 2019 & Jul 2020
The intention to liquidate Sportslink got out and many others came forward to support the motion.
Similarly, they were owed trade payables by Sportslink, totalling S$2.4 million.
Among them, Malaysian sports vendor Brooks was reportedly owed S$1.2 million.
3 Jul 2020
Sportslink ordered to be wound up and they told the public that they are closing all remaining shops permanently.
As with any company being wind up, there’s a long complicated process to follow through.
A Simple Look At What Happens When A Company Wounds Up (Closes)
To simplify things, just think of it this way: Sportslink is such a big company, they cannot just say they want to shut down like your favourite hawker stall. Well, they can lah if they’ve got no debts.
But big companies would have debts—either due to loans or credit terms.
For example, they might have a credit term of NET60 with Adidas; so Adidas could’ve supplied their shoes to them first, and Sportslink can pay within 60 days.
In the world of business, NET60 is like NET-forever if you’ve never asked for the money.
So, if Sportslink wants to wind up, they need to clear all those debts first—if not, they’ll need to sell whatever assets they have to pay off the debts.
And a liquidator is kind of like the person who helps sell those assets and determine which debts to pay off first. If there are extra after selling all the assets, then the extra cash will be given to the shareholders—though there’s usually no extra lah if not fold for what seh.
The liquidator for Sports Link said, “I will convene a creditors’ meeting within the next two weeks to notify them that the company has gone into liquidation, to disclose to them the affairs of the company, and to invite them to file claims.”
For a business to fold this sudden (or even fold in the first place since it can be sold), you can bet that creditors can just cry at one corner le. Have you got back your bike-sharing deposits yet?
Here’s a simplified summary of the South Korea martial law that even a 5-year-old would understand:
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