Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Handy Hardware Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: February 5, 2013
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Handy Hardware Wholesale, Inc., a dealer-owned hardware wholesale group operating in 14 states filed for Chapter 11 protection under bankruptcy law after a costly expansion straddled it with debt.
Handy filed for protection from its creditors in U.S. Bankruptcy Court in Wilmington, Delaware. The wholesale group has roughly 1,000 members, who wholly own the company, and 1,300 facilities that include retail hardware stores, home centers, and lumber yards. The group formed in an effort to make it more competitive against big box chains, such as Lowe’s and Home Depot. However, the company ran into financial trouble following its expansion into the southeastern U.S., according to Dow Jones Newswires.
Handy Hardware constructed a 460,000 square-foot distribution center and warehouse in Mississippi during the midst of the recession in 2009. As a result of higher costs taken on by the company to build the center, coupled with falling revenue that resulted from the down economy, Handy Hardware was unable to stay afloat and meet its operating costs. In 2011 alone, the company reported a loss of $8.4 million.
The company listed assets of $50 million and debt totaling $100 million in its court filing. In addition to bond debt, the company owes roughly $14.6 million to its largest secured creditor, Wells Fargo, the news source reports. Following the bankruptcy filing, Wells Fargo agreed to extend a $30 million dollar loan to the distressed company, which refinances the $14.6 million owed and offers $15.4 million in new financing, Dow Jones reports.
Although the company has not announced the specifics of its reorganization plan, members said they hope to emerge from proceedings in a stronger position, and still plan to operate as a member-owned company.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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