Iconic Home Depot hardware rival files Chapter 11 bankruptcy
According to The Street, The home improvement sector has encountered significant financial distress this year, resulting in several iconic retail chains filing for bankruptcy and closing stores. In some cases, companies have shut down entirely without filing for bankruptcy.
Kelly-Moore Paints Shuts Down Operations
Kelly-Moore Paints, a historic paint retailer, made the decision to shut down all 157 retail locations in January 2024, furloughing approximately 700 employees in an out-of-court wind-down of its business operations. Founded in 1946 in Irving, Texas, the company cited the heavy financial burden of paying off around $600 million in asbestos claims settlements, the risk of future asbestos claims, and its inability to invest in long-term solutions to persistent supply chain issues—exacerbated by the COVID-19 pandemic—as reasons for its closure. Kelly-Moore did not file for Chapter 11 bankruptcy reorganization or Chapter 7 liquidation due to a lack of capital to continue operations.
LL Flooring Files for Chapter 11 Bankruptcy
LL Flooring filed for Chapter 11 bankruptcy protection on August 11, 2024, in the U.S. Bankruptcy Court for the District of Delaware. The company sought a sale of its assets after facing broad headwinds in the housing, repair, and remodeling markets, which emerged as the COVID-19 pandemic subsided. LL Flooring reached an agreement to sell its assets and distribution center to a subsidiary of private equity firm F9 Investments for a purchase price that includes a $1 million fixed amount and an inventory price set at 57% of the landed cost value of the acquired inventory.
While F9 acquired 219 stores and agreed to employ up to 1,000 workers, LL Flooring still closed approximately 211 stores. On September 5, F9’s subsidiary, F9 Brands, reached an agreement with the debtors and the official committee of unsecured creditors, filing the asset purchase agreement in the District of Delaware on September 6.
True Value Co. Files for Chapter 11, No Store Closings
In a noteworthy development, True Value Co., a competitor of Home Depot, along with seven affiliates providing wholesale hardline products to 4,500 independently owned retailers, filed for Chapter 11 bankruptcy protection on October 14. The company is seeking to sell its assets to Do it Best Corp., a cooperative specializing in hardware, lumber, and building materials. Importantly, independently owned True Value hardware stores are not affected by the Chapter 11 proceedings.
True Value has entered into a prepetition stalking-horse agreement with Do it Best, which plans to acquire the wholesaler’s assets for $153 million in cash, assume certain liabilities (including up to $45 million in trade payables), and offer employment to some of True Value’s employees. The debtor aims to finalize the sale by the end of the year.
Chris Kempa, True Value’s CEO, stated, “After a thorough evaluation of strategic alternatives, we determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future.” He emphasized the benefits of partnering with Do it Best, a company with a similar history in the home improvement sector focused on supporting members and growth.
To facilitate the Chapter 11 case, the debtor is also seeking approval for $15.3 million in priming superpriority debtor-in-possession financing. True Value, based in Chicago and operating for over 75 years, listed $100 million to $500 million in assets and $500 million to $1 billion in liabilities in its bankruptcy petition filed in the U.S. Bankruptcy Court for the District of Delaware.
The company’s largest unsecured creditors include Stihl Inc. (owed $10.5 million), Hillman Group (owed $7.3 million), and Rpm International (owed $6.4 million).
