GoLite is Going Out Of Business . . .
Since its founding in 1998, GoLite accomplished amazing things. The company is widely admired for sustainably manufacturing lightweight, high-performance gear. Sadly, despite being one of the most environmentally conscious companies in the world, GoLite’s recent retail expansion proved to be unsustainable for its financial bottom line.
GoLite twice was given Best for the World Awards from B Lab — in 2011 and 2013 — for scoring in the top 10% of all Certified B Corporations and, on average, 5x higher than the average sustainable business taking the B Impact Assessment. Since GoLite began amassing awards annually in 2002, it received over 60 of them, mostly for the quality of its gear. It also excelled at transparency by fulfilling the A+ reporting level of the Global Reporting Initiative (GRI), the most well established global framework for sustainability and social responsibility reporting. GoLite was among only 368 companies globally to report at the A+ standard in 2009 and thus far is the only outdoor company ever to have done so. GoLite set the bar in so many ways and those accomplishments are in no way diminished by its current financial challenges. In fact, everyone I know is rooting for GoLite’s recovery.
So where did GoLite go wrong?
GoLite’s co-founder Kim Coupounas recently gave this passionate and inspiring talk on The Joy of Less at TEDx Boulder on September 24, 2014. The “less-on” she spoke of likely had some roots in her company’s unsustainable growth. On October 13, 2014, GoLite filed for Chapter 11 bankruptcy, seeking to re-organize in order to continue operating in some form. In an interview with BizWest.com, GoLite’s co-founder Demetri “Coup” Coupounas said that GoLite engaged in an over-ambitious retail store model and too rapid expansion into casual apparel. Specifically, he explained that the company opened 20 retail locations in 2012 — many of which were too large for its needs — while also launching a casual apparel line that its technical gear-loving consumers were not yet ready to embrace. GoLite got out of balance and that imbalance quickly took its toll.
Can GoLite Bounce Back?
In a general sense, GoLite can reorganize and be reborn. In fact, that is just what Chapter 11 bankruptcy is designed to enable. Chapter 11 differs from Chapter 7 in that Chapter 11 keeps the business going, while Chapter 7 sells of all assets and winds down (closes down) the business. According to the U.S. Bankruptcy Court Statistics, an average of 18 businesses file bankruptcy under Chapter 11 in the U.S. every single day, including weekends and holidays! Statistics on the number of successful bankruptcy discharges do not appear to be published, but presumably at least a third of the cases are discharged successfully, as there are only two other possible outcomes: dismissal or conversion to a Chapter 7 (liquidation). Although all the signs literally say that GoLite is “Going Out of Business,” hopefully GoLite will not have to.
On October 24, 2014, GoLite filed a Motion to Conduct a Going Out of Business Sale, which is not uncommon for retailer debtors. On November 13, the bankruptcy court issued an Order Approving the Sale of All or Substantially All of GoLite’s Assets and Hilco Merchant Resources commenced a Liquidation Sale at the remaining GoLite stores and online. The proceeds of this sale will go to pay GoLite’s secured creditor, while its unsecured creditors may have their debts discharged by the bankruptcy. Unfortunately, however, GoLite’s financial woes may not be the worst of its worries. The biggest challenge GoLite faces is that it cannot lawfully sell product bearing the GOLITE mark after March 31, 2015.
Is the Trademark Really Gone?!?
According to GoLite’s Motion to Conduct a Going out of Business Sale:
. . . the licensed trademark GOLITE is a held by Timberland, which has terminated the license [with GoLite]. Debtor cannot sell product with the GoLite brand after March 31, 2015.
On May 31, 2006, GoLite assigned its trademark to Timberland in a quarter-page document that likely contains the single longest sentence ever written. Readability aside, the document transferred the GOLITE brand to Timberland the along with US federal trademark registrations for: (a) tents, apparel and umbrellas; (b) backpacks and apparel and (c) sleeping bags. According to the BizWest interview with GoLite’s CEO, GoLite sold and then licensed back in perpetuity the GOLITE trademark for apparel and other non-footwear products. The intent was to have Timberland’s help selling and marketing GoLite footwear while providing GoLite access to Timberland’s global sales and distribution networks.
Unfortunately, that seems not to have happened and instead,Timberland sold the GOLITE footwear trademark to New England Footwear just two years after its acquisition. Note, there is no federal registration (or even any pending application) for GOLITE for footwear, which arguably demonstrates the level of attention paid to the GOLITE footwear brand. In 2011, Timberland itself was sold to VF Corporation, a publicly traded corporation that owns several sporting goods and apparel companies including: Jansport; Lee; Smartwool; The North Face; Vans & Wrangler, among several others. Regarding the termination of the trademark license, the BizWest article quotes Timberland’s spokesperson Leslie Grundy as stating:
Over time, we have made numerous efforts to work with Mr. Coupounas to arrive at a mutually beneficial resolution. We believe we have been more than fair. At the same time, VF Corporation is a publicly traded company with a fiduciary responsibility to maximize value for our shareholders. That includes any strategic decisions related to the GoLite trademark portfolio.
Most trademark licenses contain termination provisions in the event of non-payment and/or insolvency, and court documents show that GoLite owes timberland $15,600. That said, while trademark assignments must be recorded with the US Patent & Trademark Office, licenses need not be. Thus, the Timberland-GoLite trademark license is not public record and any speculation about its provisions is just that.
Communities Got Their Back.
GoLite has been an inspiring leader in the Boulder community, the outdoor retailer community and the B Corp community, to name but a few. The liquidation of GoLite is sorrowful for all of GoLite’s communities and stakeholders. Hopefully, this move will enable the company to recover and start over. Hopefully, the termination provisions of the GoLite trademark license have an escape clause and/or a time period for GoLite to fix (“cure”) whatever breach occurred. Hopefully, Kim and Coup feel everyone rooting them on with continued admiration and respect.