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.
