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True Value files for Chapter 11 bankruptcy and is sold to Do It Best

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True Value files for Chapter 11 bankruptcy and is sold to Do It Best

All of True Value's 4,500 stores will remain open during the bankruptcy process because they are independently owned.

Hardware wholesaler True Value has filed for Chapter 11 bankruptcy as it plans to sell its business to home improvement competitor Do It Best.

Chicago-based True Value said in a news release Monday that all 4,500 stores will remain open during the bankruptcy process because they are independently owned. The 75-year-old company initiated the process to enter into an agreement with Do It Best, which has offered to pay $153 million in cash to buy the company, Reuters reported.

True Value, which sells a variety of home improvement items such as tools, lumber and plumbing supplies, said in bankruptcy filings that the company has suffered from declining sales that have also affected other companies in the industry. The company has total liabilities of between $500 million and $1 billion, Reuters reported, citing its bankruptcy filing.

“We have determined that selling our business is the right path to maximize value and best serve our retail partners and other stakeholders moving forward,” True Value CEO Chris Kempa said in a statement. “We believe that starting the process with an agreed offer from Do it Best, which has a similar decades-long experience in the home improvement sector and also focuses on supporting members and helping them grow, is the most beneficial next step for “True value is ours.”

Bankruptcy: Over 340 Big Lots stores are closing: See the full list of closures after adding dozens of locations

Do It Best becomes the leading bidder for True Value

As part of the agreement with Do It Best, the home improvement competitor will become the “stalking horse” bidder, according to True Value. That means that while the Fort Wayne, Indiana company is technically the leading bidder, True Value remains open to better offers.

Reuters reported that in addition to paying $153 million in cash, Do It Best would also assume about $45 million in contracts and other obligations and hire some employees from True Value.

Do it Best, a member-owned wholesaler of lumber and hardware products to independent stores, announced in its own press release that the sale would create a global network of more than 8,000 stores in the U.S. and more than 50 countries around the world.

The transaction with Do it Best is expected to be completed by the end of the year.

“We understand the unique challenges of the retail industry, and if we are successful in our bid for these assets, we will be committed to driving the growth of True Value stores alongside our valued Do it Best member-owners,” said Do it Best President and CEO Dan Starr said in a statement. “This acquisition would not only represent the growth of Do it Best, but also a brighter future for the entire independent home improvement channel.”

Retailers are struggling with bankruptcy

True Value, like many other retailers, has struggled with declining sales due to rising prices and declining consumer spending.

It is now among a handful of well-known restaurant and retail chains that have filed for bankruptcy since the pandemic, including LL Flooring, Red Lobster, Rite Aid, Bed Bath & Beyond and Christmas Tree Shop. One of the most recent to do so was discount retailer Big Lots, which has closed hundreds of stores since announcing its bankruptcy proceedings in July.

Other retailers have announced a series of site closures to downsize “poor-performing” locations. Hooters, Walgreens, Sears, Kmart, JC Penney and even Disney Stores are among those that have closed stores nationwide since 2020.

Contributor: Mary Walrath-Holdridge, USA TODAY

Eric Lagatta covers breaking and breaking news for USA TODAY. Reach him at [email protected]

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