True Value, a national hardware chain that has been operating for more than seven decades, has revealed that it has gone bankrupt and will be acquired by its rival Do it Best. The Chicagoland based corporation also took the legal steps and applied for Chapter 11 Bankruptcy in the relevant court situated in Delaware. This comes at a time when True Value is looking to address its financial obligations and is exploring a solution under new management.
Chapter 11 Filing and Sale Agreement
True Value revealed in its Chapter 11 petition that almost all of the company’s assets would be divested to home improvement rival Do it Best. Founded in 1948, True Value will still offer its products to independent hardware stores. This sale agreement offers the company an opportunity to restructure its debts and continue with its business operations.
In a statement, Chris Kempa, the Chief Executive Officer of True Value, referred to the positives associated with the sale. He mentioned that he was certain that it was a positive move for the employees, customers, and suppliers to work together with Do it Best. True Value and Do it Best have both been in the home improvement industry for decades, and Do it Best also aims to cater to the needs of independent stores as does True Value.
Impact on True Value Stores
True Value stores, which are independently owned, are not directly affected by the bankruptcy filing, except for one company-owned store in Palatine, Illinois. The company operates as a member-owned cooperative, supplying products primarily to hardware retailers, garden centers, and other related businesses.
Do it Best, which is also structured as a member-owned cooperative, views the acquisition of True Value as a key step in expanding its reach and providing more opportunities for independent hardware stores. Dan Starr, CEO of Do it Best, believes the acquisition will promote growth in the hardware retail sector for years to come.
Bankruptcy Court Proceedings
As part of its bankruptcy filing, True Value has requested permission from the court to continue paying its employees and supporting its customers. The company hopes to finalize the sale to Do it Best by the end of the year. True Value currently serves over 4,500 stores worldwide, with an estimated $10 billion in total retail sales.
Surge in Business Bankruptcies
The filing for bankruptcy protection by True Value comes in the wake of a rise in the number of commercial bankruptcy filings in the United States. In this business cycle, the Publisher noted that more than 22550 businesses claimed bankruptcy in 2024 alone which is 20% higher than In the previous year, business failures which had been recorded as bankrupt rose. Chapter 7 or Chapter 11 filings have also increased for larger organizations, especially those with assets exceeding $100 million.
As noted in the report presented by Cornerstone Research, in the previous 12 months, the number of companies that reported bankruptcy has increased as 113 companies went bankrupt as compared to the average of 79 such yearly filings from the year 2005 to the year 2023. Businesses are also suffering because of many factors, including the ongoing war in Ukraine, steep inflation and increased interest rates, and the effects of COVID-19.
Future Outlook
While True Value’s bankruptcy marks a significant change for the company, the sale to Do it Best is expected to provide stability and growth opportunities for independent retailers. Both companies aim to work together to ensure long-term success for their member-owned stores across the country.
