In a letter to members, Handy Hardware Wholesale said it is not going out of business, but it asked members to show support for Handy during its reorganization and to be patient during the process.
On Friday afternoon, Handy announced it filed for Chapter 11 bankruptcy protection in hopes of reorganizing and re-emerging by early summer 2013.
In the more recent newsletter, Handy’s senior director of retail development Lynn Bradley wrote: “There are no plans to liquidate or shut down, and we don’t even see that as an option.”
The industry’s most recent case of a distributor bankruptcy was that of Alabama-based Moore-Handley, which filed for bankruptcy protection in July 2009. It was later acquired by Knoxville, Tenn.-based distributor House-Hasson. The Moore-Handley case is one in which Handy Hardware is well-versed, as Handy’s current president Tommy Schifanella spent six years as CFO of Moore-Handley.
In the Jan. 15 Handy newsletter, the company pointed to its inability to reach a deal with lender Capital One Bank as a cause of the filing for Chapter 11. “The uncertainty surrounding an unresolved debt obligation to Capital One and trailing financial issues from the Meridian expansion have been holding up progress for Handy and holding back Handy’s ability to assure vendors of timely payment,” it wrote. “The reorganization process now opens the door for Handy to make commitments to vendors for product purchases that Handy can deliver upon.”
Handy is also encouraging members to continue to order, to support the vendors, attend the Spring Market and “be patient.” The newsletter suggested that Handy’s distribution industry competitors will attempt to use the bankruptcy news for their gain, and cautioned against misinformation. “Some of our competitors simply can’t withstand the temptation to declare Handy’s demise,” it said.