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At Moore-Handley, a complicated demise

BY Brae Canlen

House-Hasson Hardware, a Knoxville, Tenn.-based hardware distributor, successfully outbid one of its rivals on Sept. 29 and secured the remaining assets of Moore-Handley for $14.5 million. The decision ended a 12-hour court hearing that pitted House-Hasson against Moore-Handley employees; city officials from Pelham, Ala.; and Bostwick-Braun, a Toledo, Ohio, distributor that had promised to breathe new life into the bankrupt company.

As that case was working out, a dispute between Moore-Handley and Handy Hardware over the latter’s hiring of territory managers was resolved when Moore-Handley dropped its case in exchange for certain concessions.

Founded in 1882, Moore-Handley filed a voluntary Chapter 11 petition on July 17, 2009, listing $18.8 million in secured debts.

The company appeared to be all but acquired by Bostwick-Braun, which had submitted a $10 million bid for Moore-Handley on Sept. 1 and upped its bid during the final hearing in U.S. Bankruptcy Court in Birmingham, Ala. In earlier court papers, Bostwick-Braun said it planned to retain the sales force and operations in Moore-Handley’s Pelham, Ala., warehouse, thereby gaining the support of Pelham city officials and many of Moore-Handley’s remaining 253 employees.

House-Hasson made no such promise in court, saying it would most likely keep a skeleton crew at the warehouse and eliminate all but a few jobs. According to industry sources, Moore-Handley employees present at the hearing objected to non-compete clauses in their employment agreements, which are now carried over to the new owner.

According to the purchase agreement filed with the court, the sale will close on Oct. 5.

House-Hasson, a member of Distribution America, serves more than 1,000 independent hardware store owners in 13 eastern states. The company did not respond to a request for additional comments.

Hiring dispute

Shortly after Moore-Handley filed for Chapter 11 on July 17, competitors—including Houston-based Handy Hardware—began recruiting its sales representatives. Two of those territory managers, Rory Fowler and Jamey Merritt, resigned from Moore-Handley because they had accepted jobs with Handy Hardware, a Houston-based co-op, on Aug. 4, according to the lawsuit filed by Moore-Handley on Aug. 7.

According to the complaint, filed in the Northern District of Alabama, Handy Hardware had begun negotiations in the fall of 2008 to purchase Moore-Handley. But after reviewing the company’s financial records and other proprietary information, decided against it the following May.

Moore-Handley sued both the salesmen and Handy Hardware, citing non-compete and non-piracy agreements the territory managers had once signed. Among other demands, Moore-Handley wanted an agreement that Fowler and Merritt would not try to solicit business for Handy Hardware in their former sales territories. Moore-Handley also asked for unspecified compensatory and punitive damages, plus attorney’s fees.

Fowler, who worked at Moore-Handley for six years, covered eight counties in Alabama and four in Tennessee. Merritt, a 26-year Moore-Handley employee, had 11 Alabama counties in his territory, along with one county in Georgia and two in Florida. In an agreement reached by both companies and filed with the court on Sept. 9, neither salesman can contact any of their former customers, or be assigned by Handy Hardware to work in these areas, until August 2010. (A separate dause, with a much shorter duration, governs territories given to Merritt shortly before he left Moore-Handley.) Fowler and Merritt are also prohibited from trying to recruit their former co-workers for a period of one year.

Although the two companies were able to reach an agreement without a protracted legal battle, a spokesperson for Handy Hardware described the lawsuit as “unfortunate.”

“The two employees in question are of the highest professional integrity, and that is why they were attractive hires,” said Lynn Bradley, Handy Hardware’s chief financial officer. Both men “realized the uncertainty in continuing to service their retail dealers during the disposition of Moore-Handley’s bankruptcy,” Bradley said, and went to work for Handy Hardware on Aug. 10, which was after the lawsuit was filed.

“While we understand the uncertainty of Moore-Handley’s situation at the time, and are sympathetic to the needs of the retailers and employees, this certainly proves the old adage,” Bradley said. “You don’t have to be wrong to be sued.”

Messages seeking further comment from Moore-Handley were not returned.

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Builders to dealers: Be proactive

BY HBSDEALER Staff

Phoenix — Federal Reserve economist Yelena Takhtamanova had both good and bad news for the attendees of the 2009 ProDealer Industry Summit (PDIS) in her address on Oct 8. The good news was that the recession is just about over. “The consensus is that we may have reached the bottom,” Takhtamanova said to a packed room of LBM dealers and suppliers. Housing starts and permits have hit their lowest point, she said, “although they didn’t have that much farther [down] to go.”

Takhtamanova was worried, however, over the 7 million jobs that have been lost since the beginning of the recession and the number of people who remain unemployed. Factoring in other data, the San Francisco economist predicted a slow, three-year recovery period before the housing market, the GDP and other indicators reach their pre-recession levels.

Faced with reluctant home buyers and a flood of foreclosed properties, Michelle Desiderio of the NAHB Research Center suggested that builders distinguish themselves with homes that carry a National Green Building Certification. Desiderio, the program director, explained the point scoring systems of the ANSI-approved designation, stressing its third-party verification system. She also gave an overview of the NAHB’s new Green Approved Products program, which lists pre-screened materials and their respective point values. “It eliminates the need for builders to do background checks on all these [green] products,” Desiderio explained.

Apanel of builders — Tony Callahan, senior VP national purchasing, planning and design for Beazer Homes; Mark Voetsch, VP purchasing and cost management for K. Hovnanian; and John Coleman, VP purchasing for Maracay Homes — discussed how the downturn has changed their purchasing and design processes. All three builders said they have removed costs from their supply chain and simplified their house models by collaborating with their suppliers.

“You need to be proactive in the process,” Voetsch said. “You should be telling us [not to] design homes that have 30 different window SKUS in them. Don’t be afraid to raise your hand and say, `I’ve got a better way.’ Just do it early in the process.”

The three-day event, which ends today, honored McCoy’s Building Supply and Home Lumber as the Home Channel News Pro Dealers of the Year. Accepting the award for McCoy’s at last night’s banquet was president and CEO Brian McCoy and his daughter, Meagan McCoy Jones, along with a team of McCoy executives that included a 40-year veteran, a 35-year veteran and a 28-year veteran of the company. Brent Johnson, who purchased his family’s California lumberyard back from Stock Building Supply, thanked his father Milt, who was also in the audience.

The National Lumber and Building Material Dealers Association (NLBMDA) installed its new officers at the Oct. 8 dinner, officially passing the gavel from ProBuild CEO Paul Hylbert, the outgoing NLBMDA chairman, to its new chairman, Dan Fesler, CEO of Lamperts.

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Around the Web: Home Depot resubmits bid for Colorado location

BY HBSDEALER Staff

In an article by the Summit Daily News, Home Depot has submitted a second plan for a 100,000-sq.-ft. store location in Silverthorne, Colo., six months after the town council approved the initial plan.

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