For the bankrupt Ann Arbor retailer formerly known as The M Den, there were serious money problems long before last month’s Chapter 11 filing.
In February, University of Michigan athletic director Warde Manuel wrote a letter to one of the retailer’s co-owners, detailing how the university’s audit of the business’s accounting records found M-Den to have been insolvent since as far back as December 2020.
The audit also found the retailer made cash distributions to its owners of over $1 million in 2022 and $790,000 for the year through November 2023 — even as the business owed millions in unpaid royalties to U-M and millions more to merchandise vendors.
The retailer then “dropped” a $3.8 million check at a reception desk at the U-M athletic department on Jan. 31, according to Manuel’s letter, but without alerting anyone that the envelope contained such a big check.
But when the university later tried to cash the check, it was twice rejected for insufficient funds.
At the time of the Feb. 7 letter, M-Den was still the “official” retailer of the U-M athletic department with rights to operate “The M Den” name. Under terms of that agreement, U-M could immediately cancel the deal if the retailer became insolvent for two months.