According to The Street, The home improvement sector has faced significant financial distress in 2024, leading several iconic retail chains to file for bankruptcy and close stores. In some cases, companies have shut down all operations without filing for bankruptcy.
Kelly-Moore Paints Shuts Down
Kelly-Moore Paints, a historic paint retailer founded in 1946, closed all 157 of its retail locations in January 2024, resulting in the furlough of approximately 700 employees. This decision came as part of an out-of-court wind-down of its business operations. The Irving, Texas-based company cited substantial financial burdens, including approximately $600 million in asbestos claims settlements and the risk of future claims. Additionally, Kelly-Moore faced challenges in investing in solutions to long-standing supply chain issues exacerbated by the COVID-19 pandemic. The company opted not to file for Chapter 11 bankruptcy reorganization or Chapter 7 liquidation due to a lack of capital to sustain operations.
LL Flooring’s Bankruptcy Filing
On August 11, 2024, LL Flooring filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The company sought to sell its assets amid challenges in the housing, repair, and remodeling markets following the subsiding of the pandemic. LL Flooring agreed to sell its assets and distribution center to a subsidiary of private equity firm F9 Investments. The sale included a fixed purchase price of $1 million, along with inventory priced at 57% of its landed cost value and assumed cure costs. Although F9 acquired 219 stores and committed to employing up to 1,000 workers, LL Flooring still closed about 211 stores.
True Value Co. Enters Bankruptcy Without Store Closures
In a notable case, True Value Co. and seven affiliates, which provide wholesale hardline products to 4,500 independently owned retailers, filed for Chapter 11 bankruptcy protection on October 14, 2024. Unlike others in the sector, this filing will not result in any store closures. True Value aims to sell its assets to Do it Best Corp., a cooperative specializing in hardware, lumber, and building materials. Importantly, independently operated True Value hardware stores are not part of the Chapter 11 proceedings.
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True Value has reached a prepetition stalking-horse agreement with Do it Best, which will acquire the hardline 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 company seeks to complete the sale by the end of the year.
Strategic Shift for True Value
“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,” said True Value’s CEO Chris Kempa. He emphasized that partnering with Do it Best, which shares a similar history in the home improvement space and focuses on supporting its members, is beneficial for True Value’s associates, customers, and vendor partners.
The debtor will also seek approval for $15.3 million in priming superpriority debtor-in-possession financing to support its Chapter 11 case. True Value, based in Chicago and operating for over 75 years, reported assets ranging between $100 million to $500 million and liabilities of $500 million to $1 billion in its bankruptcy petition. Among its largest unsecured creditors are Stihl Inc., owed $10.5 million; Hillman Group, owed $7.3 million; and RPM International, owed $6.4 million.
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