Phoenix Bankruptcy Law News

AMF Bowling Rolls into Bankruptcy Once Again

The bowling industry has gone through a lot of changes over the past few decades. First of all, the demographic has shifted from hardcore league players to a more casual crowd. Second, independently owned bowling alleys now dominate the landscape.

Industry giant AMF Bowling Worldwide Inc. has had a hard time adjusting to the changes. Last week, the company filed for its second bankruptcy in a little over a decade, The Wall Street Journal reports.

Bowling leagues were once the industry's bread and butter. With league players practicing or competing nearly every day, alleys had a constant, reliable income stream.

However, league play has been on the decline in recent decades, causing AMF's profits to plummet. Now bowling is aimed at casual players who want good food, good drink, and hip surroundings.

In response, AMF opened nine new bowling centers with lounges and modern decor. However, it wasn't enough.

During the economic downturn, AMF saw its revenue drop, while its fixed costs remained high. The company racked up a staggering $100 million to $500 million in debt, according to its bankruptcy petition. As a result, AMF was forced to file for Chapter 11 bankruptcy.

This isn't the company's first trip down bankruptcy lane. The first one went down in 2001 after AMF acquired 260 additional bowling centers. The company struggled to manage the new centers, leading to bankruptcy No. 1.

The debtor company in a Chapter 11 bankruptcy usually restructures in order to repay its creditors. That often involves selling off a number of assets.

Cody Hennessy & Simmons, a Chicago private-equity firm, bought AMF for $670 million and implemented a "simplify and transform" restructuring strategy. The company's foreign assets were sold and a new management team installed.

AMF will now change hands once again. The company's senior lenders plan to take ownership, contingent on an upcoming auction. If the deal goes through, AMF hopes to exit bankruptcy within the next five months.

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