By Peg Brickley and Jacquie McNish

Athletic gear maker Performance Sports Group Ltd. is looking for a deal by the end of February for its business, which accounts for a big chunk of the market for hockey, baseball, lacrosse and roller hockey equipment.

Fairfax Financial Holdings Ltd. and Sagard Capital Partners have agreed to make a joint bid of more than $575 million, an offer that sets a floor price for a bankruptcy auction of the company.

Performance Sports filed for protection from its creditors Monday morning under chapter 11 in Wilmington, Del., and launched a similar court proceeding in Canada. Courts in Canada and the U.S. are expected to hold joint sessions to approve the sale of the business, court papers say.

The filings came not long after securities regulators in the U.S. and Canada began to ask questions about Performance Group's finances. The company launched an internal investigation after failing to file audited financial reports for the year ended May 31. Regulatory trouble tripped alarms with secured lenders, leading to talks that culminated in an agreement to sell the company.

Performance Sports is looking for bids by Jan. 4 and an auction on Jan. 9. The swift developments that pushed the company into bankruptcy meant there was little opportunity for a marketing process, court papers say. However, Performance Sports will be looking for better offers in the coming months.

The companies planning the joint bid also committed to providing Performance Sports with debtor-in-possession financing. Bankruptcy financing comes with strings attached: The buyers want to be able to use it as currency at the auction in a so-called credit bid, in which an auction competitor that is also a secured lender offers to extinguish debt as part of the purchase price.

Bankruptcy financing also is coming from some existing lenders and is intended to assure suppliers and customers the business will continue, court papers say. Performance Sports is scheduled to go before a bankruptcy judge in the U.S. early Tuesday to outline its survival strategy.

The Exeter, N.H., company dominates segments of the North American sports market with such brands as Bauer hockey gear and Easton baseball equipment. Debt it took on to acquire Easton's baseball and softball business for $330 million was one factor that plunged Performance Sports into bankruptcy.

Another factor was the bankruptcy liquidation of Sports Authority Holdings Inc., a retailer that went out of business in chapter 11, leaving Performance Sports with a big unpaid bill.

Given the sizable opening offer from buyers committed to keeping its doors open, Performance Sports is projecting a happier ending for its own chapter 11 proceeding, court papers say.

Sale proceeds "will be well in excess of the company's outstanding secured indebtedness and are expected to provide meaningful recoveries to the company's remaining stakeholders," court papers say.

Performance Sports owes about $489.4 million on a secured basis, while suppliers and other trade vendors are owed an estimated $40 million, court papers say.

Lillian Rizzo contributed to this article

Write to Peg Brickley at peg.brickley@wsj.com and Jacquie McNish at Jacquie.McNish@wsj.com

(END) Dow Jones Newswires

October 31, 2016 12:10 ET (16:10 GMT)

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