On January 11, 2013, Handy Hardware Wholesale, Inc. (“Handy” or the “Debtor”) filed a chapter 11 petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. As stated in Handy’s court filings, the company is a wholesale purchaser of hardware supplies which it in turn sells to its members at a discount. See Declaration of Thomas J. Schifanella, Jr. in Support of Chapter 11 Petition and First Day Pleadings (the “Decl.”) at *4. The company’s members operate over 1,300 retail stores, lumber yards and home centers in 14 states in the United States, Mexico, South America and Puerto Rico. Id.. In order to purchase inventory for its members, Handy Hardware buys from over 1,300 vendors. By purchasing in bulk, the company is able to purchase inventory at a reduced cost and pass the savings on to its members. Id.
Events Leading to Bankruptcy
Handy Hardware began purchasing for its members in 1961. Over the years the company continued to add more members. In 1986, Handy began an expansion project wherein it expanded its Houston warehouse from 100,000 square feet to 560,000 square feet and built a second warehouse in Meridian, Mississippi. Decl. at *15. Whereas the Houston expansion was funded with cash, Handy funded the Meridian warehouse facility through a $20 million bond. Decl. at *9.
Handy took on the debt from the Meridian whereas as the country entered into a recession. As a result of poor economic conditions, the company was unable to grow at levels necessary to sustain operations of the Meridian facility. Decl. at *15. Although sales reached $240 million in 2011, increased operational costs and debt service generated an $8.4 million loss. Id.
Objectives in Bankruptcy
Given the loss associated with the Meridian warehouse, Handy decided to close that facility and re-route deliveries to its Houston warehouse. Decl. at *16. In November, Handy notified its employees at the Meridian warehouse that their positions would be eliminated effective January 31, 2013. Decl. at *15. Through bankruptcy, the company intends to restructure its debt with its lenders and emerge from chapter 11 proceedings with a consensual plan of reorganization. Decl. at *16. Handy is represented by the Delaware law firm of Ashby & Geddes, P.A..