Armstrong Flooring files for bankruptcy in hope of a sale
(Reuters) - Armstrong Flooring Inc filed for bankruptcy on Sunday in the hope of finding a buyer after months of negotiations with lenders over its future.
The flooring company sought Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware with $317.8 million in debt. The Lancaster, Pennsylvania-based public company partly blamed inflation and manufacturing shutdowns caused by the COVID-19 pandemic for its losses and strained financial position, according to a written declaration from CEO Michel Vermette on Monday.
The company’s lawyers at Skadden, Arps, Slate, Meagher & Flom will appear before U.S. Bankruptcy Judge Mary Walrath on Wednesday for approval of a $30 million loan from JMB Capital Partners Lending LLC to fund operations during the bankruptcy.
Armstrong Flooring spent the last several months on the hunt for a buyer. Though it received indications of interest from potential buyers, it ultimately wasn’t able to pin down a firm offer, according to court papers. Meanwhile, the company was operating on financing from lenders that imposed hefty fees and expenses. At one point in April, lenders threatened to immediately shut the company down, according to Vermette.
The company will continue business operations during the bankruptcy and sale process, Vermette said in a statement.
The pandemic hit the U.S. at a particularly bad time for Armstrong Flooring, which had recently spent "significant resources" to implement a plan to modernize its operations, Vermette said in his declaration.
Though the company’s performance improved somewhat in 2021, inflation and supply chain issues kept its profits down, he said.
Armstrong Flooring, which spun off from Armstrong World Industries Inc in 2016, sells its products largely to wholesale distributors as well as specialty retailers. The products, which include vinyl composition tile, vinyl sheet and luxury vinyl tile, are used in commercial and residential housing. The company has flooring plants in Illinois, Mississippi, Oklahoma and Pennsylvania.
The case is In re Armstrong Flooring, Inc., U.S. Bankruptcy Court, District of Delaware, No. 22-10426.
For Armstrong: Joseph Larkin, Carl Tullson and Ron Meisler of Skadden Arps Slate Meagher & Flom; and Robert Weber of Chipman Brown Cicero & Cole
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