(Bloomberg) -- Wholesaler True Value Co. filed for bankruptcy in Delaware on Monday as it seeks to sell its business to rival Do it Best Corp.
The Chicago-based home-improvement company will continue to operate under Chapter 11 protection with Do it Best providing a so-called stalking horse bid, meaning that it’s subject to better offers, should any materialize, according to a company statement. The bidder offered to pay $153 million in cash, according to the bankruptcy filing.
“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,” True Value’s Chief Executive Officer Chris Kempa said.
The company “faced significant liquidity challenges” and hired Houlihan Lokey Inc. in May as financial adviser to review options, it said in the filing. True Value is the latest firm seeking Chapter 11 protection as inflation impacts household spending for discretionary goods in the US. Home, clothing and hobby store chains dominate the list of distressed retailers, according to Moody’s Ratings.
True Value is seeking to use its cash collateral to support the business through the sale process, and it has received a commitment from Do it Best to provide additional capital. The company serves a network of 4,500 independently-owned and operated retailers.
It has estimated liabilities between $500 million and $1 billion, and assets between $100 million and $500 million, according to the Chapter 11 filing. Private equity firm Acon Investments purchased a stake in True Value in 2018.
The US bankruptcy case is True Value Company LLC, 24-12337, US Bankruptcy Court District of Delaware (Wilmington).
(Updates with value of the bid in second paragraph, details from filing in fourth.)
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