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Posted on 10/15/2024 6:41:04 AM PDT by Red Badger
True Value said the bankruptcy filing came after a significant cash crunch, as the housing market stalled and consumers became more hesitant to spend cash.
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Chicago-based hardware wholesaler True Value has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, with plans to sell most of its business operations to a rival in the sector, Do it Best.
Chapter 11 bankruptcy allows businesses to maintain regular operations while creating a plan to repay creditors.
According to an Oct. 14 news release, the now 75-year-old brand True Value will continue its day-to-day operations as normal for now, with its 4,500 independently owned retailers not included in the bankruptcy filing. The hardware wholesaler’s locations are owned independently by franchisees. Only a single location owned by the company in Palatine, Illinois, a northwest Chicago suburb, is part of the proposed sale.
True Value’s Chief Executive Officer Chris Kempa said “entering the process with an agreed offer from Do it Best” was flagged as the “most beneficial next step 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,” Kempa said.
In its Oct. 14 bankruptcy filing, True Value said it filed for bankruptcy and decided to sell after a significant cash crunch, as the housing market stalled and consumers became more hesitant to spend cash on discretionary purchases like hardware. The transaction with Do it Best is expected to be completed by the end of the year for a reported $153 million. It will include owned property, all owned tangible property, accounts, machinery, equipment, movable property, and vehicles. It’s also expected to include inventory, all transferred IP, and leased property under leases that are transferred contracts.
The sale process has been flagged as critical to achieve quickly “to minimize disruption and potentially irreparable harm to their business and curtail professional fees and administrative costs.”
In the filing, Do it Best is listed as the “stalking horse” or lead bidder “to initiate a competitive bidding process.” No other bidders have come forward at this time. If needed, Do it Best has also committed additional funding to True Value so the company can continue normal operations during the bankruptcy proceedings. True Value has sought to use its cash collateral for operational expenses at this stage.
Do it Best President and Chief Executive Officer Dan Starr said the purchase of True Value would be a significant boon for his company.
Starr said the “successful acquisition of True Value assets” would represent a strategic milestone for Do it Best and home improvement retailers around the world.
“This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come,” Starr said.
True Value is among a growing list of prominent retailers that have filed for bankruptcy in 2024.
In September, discount retail chain Big Lots filed for bankruptcy protection. The company said inflation, high interest rates, and a slowdown in consumer spending on home goods such as furniture and décor had led to a downturn in business. Nexus Capital Management eventually agreed to buy Big Lots for $760 million, consisting of $2.5 million in cash plus its remaining debt.
LL Flooring, formerly Lumber Liquidators, also submitted its Chapter 11 documents in August. The company planned to close over 400 locations and liquidate all its assets after failing to find a buyer. By September, the company announced plans to go out of business entirely and liquidate all its assets.
Home goods retailer Conn’s HomePlus also filed for Chapter 11 bankruptcy in July, announcing plans to close 70 stores in 13 states.
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Another long time business failing. The Biden/Harris administration is showing their True Value to America.
When I saw they wanted to be bought by a competitor, I had assumed Ace Hardware. DoIt Best is a small fish, unless they are huge in some part of the country I haven’t lived in. This is like when CapCities bought ABC.
Well, Ace IS the place with the helpful hardware man.
That was my first thought as well.
Never heard of Do It Right.............
BTW, I’m sitting on the other side of the wall of an Ace Hardware right this second..............
Eventually it will be bought out by some venture capital conglomerate.
How slow is the housing market now?
I see some for sale signs that have been up since spring.
Do it Best is the largest coop(buying group) in the lumber industry. The other large on is LMC(Lumbermans Merchandising Corp).
Do, Do It Best is a pretty big player when is comes to wholesaling things like OSB, Lumber, Plywood and other commodity building materials. Almost every independent lumber yard left in the USA is in one of these two buying groups.
It is hard to understand for me as a lumber broker how some company like True Value could go out of business. The mark up on hardware and other items like that is huge. Several hundred percent on most small hardware items. As opposed to lumber, OSB and plywood where the average wholesale margin is 3-4 %.
I didn’t know about Lumber Liquidators. We buy all our flooring from them. 😤
True Value is among a growing list of prominent retailers that have filed for bankruptcy in 2024.
Another Biden trade mark
Another long time business failing. The Biden/Harris administration is showing their True Value to America.
______________________________
Bidenomics proving its worthlessness every day. American mainstay business names fading into the ignominious history books.
Me too. I was expecting Ace Hardware to be the buyer.
Then again, why this week to announce bankruptcy? Why not wait until Nov 6?
Their stock got hammered form over $60 to under $10.
I guy in my office used to sell them Eastern White Pine flooring out of Maine.
Same story, they got too big, over leveraged and couldn't cover their debt.
The Do It Best near me gets twice the price for drywall than Lowes. Same with plumbing items. The lumber isn’t too bad. Propane refills are a good price. They morphed a few years ago. Brought in all new people and quit carrying some items. Nothing for fence except staples. No more fence wire, barbed or smooth. No cattle panels. This is cattle farming country. They’re going the way of a tiny home improvement store rather than good ole hardware store that used to serve farmers’ needs.
“Do it Best”...They are actually pretty widespread. Our southern IL town Lumberyard/Hardwaare store is a “Do it Best”.
predatory capitalism aka monopolism thy name is Home Depot.
We have a Rural King in town to satisfy that market.
So, you are ‘floored’?.....................🙄
That’s too bad. Their prices were good and we never got bad flooring. We are getting ready to install the last load we bought in our kitchen and we were going to buy all the flooring for our new rural home from them. I guess we’ll probably just buy for the new place from Lowes with Mr. GG2’s builder discount.
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