After months of uncertainty, insolvent Bauer hockey gear maker Performance Sports Group Ltd. has laid out a survival plan for the future, announcing Monday that it is filing for bankruptcy protection while organizing an auction to sell the company.

PSG said in court filings that it is facing a "severe liquidity crisis" and currently has just $7.2-million (U.S.) in cash on hand, which is not enough to even cover $7.5-million in accrued and unpaid employee wages and sales tax as of Oct. 21.

But it said its largest shareholder, Sagard Capital Partners LP, and Fairfax Financial Holdings Ltd. have teamed up to make an offer to acquire the company for at least $575-million and provide an emergency loan to allow PSG to continue operating as usual.

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A court-supervised auction will now unfold as PSG looks for an even higher bid, but it said the Sagard offer will set a minimum acceptable price.

PSG, based in Exeter, N.H., makes hockey, baseball and lacrosse gear under brands such as Bauer and Easton, and fell into financial difficulty after accruing high levels of debt to finance a string of acquisitions.

It filed Monday for court protection from bankruptcy in Canada and the United States, saying it has been hit by a downturn in retail sales and a spate of retailer bankruptcies this year.

"Without [bankruptcy protection], a shutdown of operations is inevitable, which would be extremely detrimental to the PSG entities' stakeholders, including employees, suppliers and customers," PSG chief financial officer Mark Vendetti said in an affidavit filed in Ontario Superior Court.

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The company has 728 employees after cutting 19 per cent of its work force since January to reduce costs.

The Sagard offer for PSG would provide enough cash to repay its current $489-million in secured loans and should cover much of its remaining debt, including $40-million owed to trade creditors. PSG told the court it has assets of $594-million and total liabilities of $607-million.

PSG said it will now launch a process to seek other bids with an anticipated offer deadline of Jan. 4. The company will hold an auction, if necessary, on Jan. 9. PSG said its adviser, Centerview Partners LLC, has prepared a list of 90 prospective purchasers that it will now contact.

If a higher bidder emerges, the Sagard group will be paid a break fee of $20.1-million, court filings show. The Sagard offer must close by Feb. 28.

To continue operating, PSG has also secured $386-million in new debtor-in-possession financing from Sagard, Fairfax and some of its existing lenders to fund the auction and sales process and provide working capital as it continues operating during the restructuring.

Sagard is owned by Canada's wealthy Desmarais family and controls 17 per cent of the stock. Fairfax has not previously taken a stake in the business.

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Sagard executive chairman Paul Desmarais III said in a statement that the company "owns some of the most iconic, innovative and valuable brands in sports" and that his company is a long-term shareholder with a goal to preserve and grow the company.

It is unclear whether there will be enough money raised from the sale to provide any payout for common shareholders, who rank after debt holders in an insolvency.

PSG is currently dual-listed on the Toronto and New York stock exchanges. Both exchanges moved Monday to indefinitely suspend trading in the shares. The New York Stock Exchange said it is commencing proceedings to delist the shares after reaching a decision the company "is no longer suitable for listing" because of its bankruptcy filing. The TSX said it is reviewing whether to delist the company.

PSG said it had to file for bankruptcy protection Monday because it was unable to complete an internal investigation and prepare its year-end financial statements by a deadline Friday. The failure to file left the company offside on loan covenants from its lenders and Mr. Vendetti said PSG could not negotiate an extension with its lenders on "commercially reasonable terms."

However, the company has shed no light on what its internal investigation has uncovered and why it has been unable to complete financial statements after months of internal review, noting only that the timeline for completing the work "remains uncertain."

In court filings Monday, PSG revealed more details about regulators investigating the company. In addition to an inquiry by the U.S. Securities and Exchange Commission, PSG said it is also under review by the Ontario Securities Commission, and has been contacted by the U.S. Financial Industry Regulatory Authority, which is reviewing unusual trading of the company's shares on two dates this year.

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The company said it is facing large bills to pay for a host of lawyers and professional advisers to reply to regulatory inquiries, work with its audit committee on the internal financial review, and oversee its efforts to restructure. Mr. Vendetti said the expense is "not sustainable in the long and likely even short term."