True Value, a well-known hardware retailer with over 70 years in business, announced on Monday that it has filed for bankruptcy and will be selling to a competitor, Do it Best.
The company sought Chapter 11 protection in the US Bankruptcy Court for the District of Delaware. This means True Value will reorganize its debts while a significant portion of its assets will be taken over by Do it Best, a rival in the home improvement industry.
True Value Hardware Enters Bankruptcy
True Value, founded in 1948, is a cooperative wholesaler that supplies products to independent retailers, garden centers, and various other merchants.
According to CEO Chris Kempa, the decision to partner with Do it Best is the best option for True Value, its employees, customers, and vendor partners. He emphasized that Do it Best is known for supporting its members and promoting growth.
While the bankruptcy affects True Value's operations, individual True Value stores remain unaffected, except for one company-owned location in Palatine, Illinois. The company operates over 4,500 stores globally and achieved retail sales totaling $10 billion.
Dan Starr, the head of Do it Best, expressed that acquiring True Value is a major milestone for the Fort Wayne, Indiana-based company. He noted that the acquisition could provide True Value and independent hardware stores with significant growth opportunities in the future.
True Value Seeks Employee Support Amid Rising Corporate Bankruptcies
To support its employees, True Value has submitted motions to the bankruptcy court to ensure that wages and benefits continue during this transition. The company aims to finalize its transaction with Do it Best by the end of the year, said CBS News.
This announcement comes at a time when corporate bankruptcies are on the rise. In 2024, commercial bankruptcies have increased by 20% compared to last year, with over 22,550 businesses seeking protection from creditors, according to Epiq AACER.
Factors contributing to this surge include rising inflation, increased interest rates, and lingering effects from the pandemic.
The housing market has also slowed down due to high mortgage rates, leading to decreased demand for building materials.
Major retailers like Home Depot and Lowe's have struggled to bounce back from this downturn, while discount retailers like Target and Walmart have thrived as budget-conscious shoppers look for deals. Other home furnishing retailers, like Big Lots and LL Flooring, have recently filed for bankruptcy due to a sharp drop in sales, said NY Post.
