Iconic Home Depot Rival Files for Chapter 11 Bankruptcy: What’s Next?
According to The Street, The home improvement sector has faced significant financial distress in 2024, prompting several iconic retail chains to file for bankruptcy, close stores, or, in one case, cease operations without filing for bankruptcy.
Kelly-Moore Paints Shuts Down All Locations
Kelly-Moore Paints, a historic paint retailer, closed all 157 of its retail locations in January 2024, furloughing approximately 700 employees as part of an out-of-court wind-down of its business operations. Founded in 1946, the Irving, Texas-based company cited several factors for its closure, including:
- A $600 million financial burden from asbestos claims settlements.
- The risk of millions of dollars in future asbestos claims.
- Inability to invest in solutions to long-standing supply chain issues exacerbated by the COVID-19 pandemic.
Kelly-Moore did not file for Chapter 11 bankruptcy reorganization or Chapter 7 liquidation due to insufficient capital to support continued 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 to sell its assets after facing challenges in the housing, repair, and remodeling markets that arose as the pandemic subsided.
The company reached an agreement to sell its assets and distribution center to a subsidiary of private equity firm F9 Investments for a total purchase price that included a $1 million fixed amount and 57% of the landed cost value of acquired inventory. Although F9 acquired 219 stores and committed to employing up to 1,000 workers, LL Flooring still closed 211 locations.
On September 5, F9’s subsidiary, F9 Brands, filed an asset purchase agreement in the District of Delaware, having reached a consensus with the debtors, the official committee of unsecured creditors, and debtor-in-possession asset-based loan lenders.
True Value Co. Files for Chapter 11, Avoids Store Closures
In a notable development, True Value Co., a competitor to Home Depot, filed for Chapter 11 bankruptcy on October 14 along with seven affiliates. The company provides wholesale hardline products to 4,500 independently owned retailers but confirmed that these stores are not part of the bankruptcy proceedings.
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True Value has a prepetition stalking-horse agreement with Do it Best Corp., a hardware, lumber, and building materials cooperative, which aims to acquire True Value’s assets for $153 million in cash. The deal also involves assuming certain liabilities, including up to $45 million in trade payables, and offering employment to selected employees.
True Value’s CEO, Chris Kempa, 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.” The company seeks to complete the sale by the end of the year.
Financial Details and Future Plans
To support its Chapter 11 case, True Value will seek approval for $15.3 million in priming superpriority debtor-in-possession financing. The Chicago-based company, which has operated for over 75 years, listed assets between $100 million and $500 million and liabilities between $500 million and $1 billion in its petition filed in the U.S. Bankruptcy Court for the District of Delaware.
True Value’s largest unsecured creditors include Stihl Inc. (owed $10.5 million), Hillman Group (owed $7.3 million), and Rpm International (owed $6.4 million).
