Home Depot rival files Chapter 11 bankruptcy seeking asset sale | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The home improvement sector has faced financial distress and bankruptcy filings over the last year after an increase in business from do-it-yourself consumers during the Covid-19 pandemic plummeted when the pandemic subsided.

Once homeowners returned to their jobs and other activities, and no longer had plenty of time on their hands for home improvement projects, home improvement retailers experienced a decline in sales.

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Home improvement retailer LL Flooring on Aug. 11, 2024, filed for Chapter 11 bankruptcy protection seeking a sale of its assets, after suffering from headwinds in the housing, repair, and remodeling markets that occurred when the Covid-19 pandemic subsided, court papers said.

LL Flooring agreed to a sale of its assets and distribution center to a subsidiary of private equity firm F9 Investments for a purchase price including a $1 million fixed amount, an inventory price of 57% of landed cost value of acquired inventory, and assumed cure costs.

F9 acquired 219 stores and agreed to employ up to 1,000 workers, but the debtor still closed about 211 stores.

Inflation and supply chain issues from the Covid pandemic caused cost overruns of $30 million, as well as unexpected engineering problems, for TimberHP’s construction and retrofitting of a former Madison, Maine, paper mill into the company’s new wood fiber insulation manufacturing plant.

The company’s owner GoLab, which distributes TimberBatt, TimberFill, and TimberBoard wood fiber insulation products, was forced to file for Chapter 11 bankruptcy to reorganize its debts on March 25, 2025, in the U.S. Bankruptcy Court for the District of Delaware.

Gardener’s Supply Company files for Chapter 11 bankruptcy.

Gardener’s Supply Company

Gardener’s Supply Company files for bankruptcy protection

And now, the parent company of home improvement retailer Gardener’s Supply Company filed for Chapter 11 bankruptcy protection, seeking to sell its assets to a stalking-horse bidder as it faces financial distress.

The Burlington, Vt.-based employee-owned company filed its petition on June 20 in the U.S. Bankruptcy Court for the District of Delaware, along with a bidding procedures motion designating Gardens Alive Inc. as the stalking-horse bidder with a $9 million offer to purchase the debtor in a Section 363 bankruptcy sale.

The stalking-horse bid, if approved by the bankruptcy court, would include a $360,000 break-up fee to be paid to Gardens Alive if it is not the winning bidder in a bankruptcy auction.

Competing bids at the auction must offer a minimum purchase price of $9.61 million, which amounts to the $9 million stalking-horse bid, the $360,000 breakup fee, and a $250,000 minimum overbid.

More bankruptcy:

Garden Supply’s parent and the lead debtor, America’s Gardening Resource Inc., and four affiliates Gardener’s Home LLC, Innovative Gardening Solutions Inc., IGH Inc., and Serac Corporation, listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in their petition.

The debtor is 100% owned by an employee stock ownership plan.

American Gardening Resource listed $8.2 million in secured funded debt, which includes over $5.04 million owed to Bank of America and over $3.16 million owed to Northfield Savings Bank.

The Home Depot rival’s largest unsecured creditors include UPS, owed over $913,000; Google Inc., owed over $631,000; Prides Corner Farms, owed over $374,000; and Meta Platforms, owed over $345,000.

The company’s annual revenue plummeted from $110.3 million in 2021 to $71.5 million in 2024.

The gardening business is highly cyclical, with a gardening season from March through June and a holiday season in November and December, the debtor’s Chief Restructuring Officer David M. Baker said in a declaration. The debtor relies on a line of credit from Bank of America to continue operations outside of the gardening and holiday seasons.

The debtor experienced significant sales growth during and after the Covid-19 pandemic in 2020, 2021, and 2022, which resulted in the ESOP share price tripling and being paid out as equity to shareholders.

Adding to the ESOP problems, several vested employees retired, which required the debtors to fund the ESOP plan, stock appreciation plan, and warrant plan to pay retirees, causing significant liquidity issues.

By the third quarter of 2023, the debtor fell out of compliance with its Bank of America line of credit because of the underperformance of the company.

Gardener’s Supply has line of credit problem

The debtor was unable to exit its line of credit as required in the second quarter of 2024, which led to a third forbearance agreement that expires on June 29, 2025.

The debtor manufactures about 150 products through its affiliate Serac, which are sold by the company’s affiliates.

The parent company’s Gardener’s Supply affiliate operates retail stores in Burlington, Shelburne, and Williston, Vt.; Lebanon and Greenland, N.H.; and Hadley, Mass.

The company sells garden tools, composters, and soil improvement products, seed starting supplies, organic fertilizers, natural pest controls, containers, raised beds, garden furniture, water-saving irrigation products, power equipment, garden ornamentation, indoor flowering holiday gifts, and other products.