🧑🌾New Chapter 11 Bankruptcy Filing - America's Gardening Resource, Inc.🧑🌾
Retailer gets ambushed by its employees ... uh ... retiring.
Continuing to make good on our ‘25 resolution to monitor smaller filings, on June 20, 2025, Burlington, VT-based America's Gardening Resource, Inc. and four affiliates (collectively, the “debtors”) — better known under their trade name Gardener’s Supply — filed chapter 11 sale cases in the District of Delaware (Judge Shannon). The debtors are “… a multi-channel marketer of gardening products and equipment, as well as live goods for gardeners throughout the United States.” Basically a one-stop shop for gardening needs, they vend “… garden tools, composters and soil improvement products, seed starting supplies, organic fertilizers and natural pest controls, containers, raised beds, garden furniture, water-saving irrigation products, power equipment, garden ornamentation, and indoor flowering holiday gifts, among many other products.”
Given the nature of the biz, care to guess what happened?
If you thought “COVID-driven revenue explosion,” congrats, you’re right, not that it was much of a challenge. Prior to the pandemic, the company had about $70-80mm in revenue per year, split ~30% brick-and-mortar and ~70% e-commerce, but with everyone stuck at home, business boomed. In ‘21, the company’s revenue bumped ~36% to $110.3mm.
Softball out of the way, time for something harder: What went wrong?
…
Have your answer ready?
Um … sorry, short of being clairvoyant (or working on this deal), you’re dead wrong. No, there wasn’t a deSPAC sh*tco merger, there wasn’t an IPO, there wasn’t even a drop of private credit infusion. Instead, the debtors’ succumbed to the weight of, lol, post-pandemic retirements.
You see, the debtors are 100% employee-owned, and the COVID business boom caused their stock price to skyrocket. Taking note and deciding it was time to mind their own gardens, “… several employees with significant tenure retired from their employ with the Debtors …” Those decisions, in turn, required “… the Debtors to fund the [employee stock ownership] plan, stock appreciation plan, and warrant plan in order to pay the retirees.”
If sales stayed elevated, maybe that wouldn’t have been a problem, but as Johnny’s seen all too oft in recent bankruptcies, that didn’t happen and they fell off as folks left their flower beds for the real world. Revenue also quickly fell back to earth. In ‘23, the debtors brought in a much-lower $89.6mm, which fell further in ‘24 to $71.5mm. Coupled with a botched systems-and-processes upgrade, which delayed over 60% of May ‘24 customer orders and cost $5-10mm in lost revenue, the debtors found themselves with too little cash, too much debt, and a liquidity crunch.
In September ‘23, the debtors started tripping financial covenants under their prepetition loan docs …
… which led to a series of forbearances and the debtors’ December ‘24 engagement of Tower Partners, LLC (“Tower”) to kick off a sale process. And holy sh*t did Tower ring up everyone in the Rolodex. It contacted a purported one-thousand-one-hundred-and-fifteen financial and strategic potential purchasers for the debtors’ assets.
But we’d estimate a lot of them were an immediate “pass” because the process only yielded 51 NDAs, eight indications of interest, three indications of intent, and one measly asset purchase agreement. One APA is, however, all you need for a stalking horse, so the debtors filed to pursue it and its $9mm disposition of the biz to Gardens Alive, Inc. (“Garden Alive”)* on the following, per Judge Shannon, “condensed” timeline.
That 43-day timeline ☝️, though, isn’t yet set in stone. At the debtors’ June 24, 2025 first-day hearing, the court scheduled the bidding procedures hearing for July 10, 2025 at 1:30pm ET, subject to the whines — about the hearing date or the schedule — of any official committee of unsecured creditors appointed in the interim. Otherwise, the first-day was pretty smooth, and the court granted all requested relief in about an hour and scheduled a second-day hearing for July 16, 2025 at 11am ET.
The debtors are represented by Cole Schotz, P.C. (Gary Leibowitz, Patrick Reilley, H.C. Jones III, Jack Dougherty, J. Michael Pardoe) as legal counsel, Aurora Management Partners Inc. (David Baker, Glenn Bartley) as financial advisor and CRO, and Tower Partners, LLC (Erv Terwilliger) as investment banker. Prepetition lender Bank of America, N.A. is represented by Chapman and Cutler LLP (Daniel Flores, J. Alex Kress) and Morris James LLP (Carl Kunz, III, Eric Monzo) as legal counsel. Proposed stalking horse purchaser Gardens Alive is represented by Kavinoky Cook LLP (David LoTempio) and Casner Edwards, LLP (Michael Fencer, John Morrier) as legal counsel.
*If approved as the stalking horse, Garden Alive will be entitled to a $360k break-up fee, without expense reimbursement, as its bid protection.
Company Professionals:
Legal: Cole Schotz, P.C. (Gary Leibowitz, Patrick Reilley, H.C. Jones III, Jack Dougherty, J. Michael Pardoe)
Financial Advisor and CRO: Aurora Management Partners Inc. (David Baker, Glenn Bartley)
Investment Banker: Tower Partners, LLC (Erv Terwilliger)
Claims Agent: Stretto (Click here for free docket access)
Other Parties in Interest
Stalking Horse Purchaser: Gardens Alive, Inc.
Legal: Kavinoky Cook LLP (David LoTempio) and Casner Edwards, LLP (Michael Fencer, John Morrier)
Prepetition Lender: Bank of America, N.A.
Chapman and Cutler LLP (Daniel Flores, J. Alex Kress) and Morris James LLP (Carl Kunz, III, Eric Monzo)