Out of business: Kelly-Moore Paints
It’s the end of the road for Kelly-Moore Paints, the West Coast paint giant that enjoyed a nearly 80-year run.
Unable to pay creditors and running out of money and unable to find investors to carry on its colorful tradition, Kelly Moore Paints furloughed approximately 700 employees across the company’s locations, as well as put a halt at its manufacturing facility.
All 157 of its company-managed stores in California, Nevada, Oklahoma and Texas were shuttered early this month.
"I'm extremely disappointed and saddened by this outcome, as the entire Kelly-Moore team made incredible efforts to continue innovating and serving the unique needs of professional painting contractors,” said CEO Charles Gassenheimer. “The ownership group’s commitment from day one was to fix the business if we could. Sadly, no matter how great the Kelly-Moore team, products and reputation for service, we simply couldn’t overcome the massive legal and financial burdens that have been weighing on the company for many years.
“I could not be prouder of what our talented team accomplished under extremely challenging circumstances,” continued Gassenheimer. “My deepest sympathy goes out to our loyal employees, customers, industry partners and the communities where we do business, who have supported Kelly-Moore throughout its long history. Unfortunately, this was the only viable alternative remaining for us after evaluating all other potentially feasible options.
“Our owners took on significant financial risks in the acquisition last year,” continued Gassenheimer. “Unfortunately, despite their extraordinary efforts after acquiring this distressed business, they simply couldn’t overcome the unexpectedly large challenges, and will be exiting the business.”
For more than 30 years, the company has been grappling with thousands of asbestos litigation claims related its past use of asbestos in cement and texture products under prior ownership, a practice that was discontinued in 1981. Through the cumulative cash drain caused by legal settlements and the cost of defending ever-continuing case filings, the paint company’s ability to reinvest in the business – including investments needed to address historical supply chain challenges that were exacerbated by the recent pandemic – has been severely constrained for an extended period of time.
Despite paying out approximately $600 million over the past 20 years to settle asbestos claims, a recent study commissioned by the company estimates future asbestos liabilities exceed $170 million.
The company described an intention to conduct “an orderly, out-of-court wind-down process,” as neither bankruptcy reorganization nor an in-court liquidation were deemed viable. The company leased all its facilities, as opposed to owning them, and could not offer hard assets to creditors.
Pleuger Chemicals acquired Kelly-Moore in October of 2022. Gassenheimer, described as a seasoned businessman and experienced turnaround professional, was appointed CEO to develop strategies to fix the company's dire financial position.
The company tried starting the process of relocating the company’s headquarters from California to Texas, explored new supply-chain partnerships domestically and abroad, planned strategic technology and store upgrades, and resolved a sizeable portion of the pending asbestos claims.
But the those strategies failed to save the company.
