Builders Supply Seeks To Liquidate
The company also operates under the names Glendale Plumbing Supply Co., Southwest Pipe & Supply and Spesco. Together with Builders, they form what is known within the industry as the Builders Group of Companies. The wholesaler services eight major markets across five states and markets more than 30,000 items from 130 manufacturers.
In its court documents, Builders attributed its problems to the growth of big-box retailers such as Home Depot and Lowe's, which sell directly to contractors and the general public and have pricing power that cannot be matched by smaller competitors; the Internet's increasing role as a source of information, which has cost the company the loss of the do-it-yourself customer and the buy-it-yourself customer; the acquisition of an irrigation competitor by a major company with aggressive pricing policies; and a non-profitable alliance with one big retailer.
“In the past a large part of Builders customer base was selling to the contractor the products to be installed,” the company said in its petition. “Today the consumer is better informed and has more choices than before and may desire to choose to purchase the products themselves and either install it themselves or (have) others install it for them. Either way, this deprived Builders of a sale.”
Builders said it had attempted to survive by aligning itself with one big retailer, but this resulted in large losses and was the start of “the financial death spiral,” according to court documents. “With contracted liquidity and constrained by its asset-based borrowing facility, Builders recently has had difficulty in servicing the full orders of its customers. With time being money to the contractor, this inability to service the full order has resulted in lost orders, not just lost sales from the items that cannot be filled,” the company said. This further accelerated the sales decline.
On the date of the filing of its petition, Builders had more than 600 employees nationwide, many of whom were members of the Teamsters Union, Local 710.
In court documents Builders said it did not have the financial resources or access to capital for a prolonged restructuring, so the most viable option would be to sell its branch locations in Addison, Mundelein, South Holland, Burbank, Crystal Lake and Chicago, Ill.; Indianapolis and South Bend, Ind.; Louisville, Ky.; Milwaukee and Madison, Wis.; and Winter Haven, Lakeland and Fort Myers, Fla. It also proposed to sell its inventory with a cost value of about $30 million, comprised of plumbing and heating materials and supplies including but not limited to PVC and copper tubing, PVC and copper fittings, plumbing fixtures (such as lavatories, shower units, tubs and faucets), heating and air conditioning units, and water boilers. The wholesaler's machinery and equipment, including but not limited to racking, forklifts and motor vehicles, were also to be offered for sale.
Builders said in its petition that it believes its sale assets should be sold in separate lots and that it has been approached by parties interested in purchasing some of the sale assets.
Jan. 14 was requested as the date for the sale and Builders asked the court to set a hearing on the sale for Jan. 15. See the Supply House Times Web site at www.supplyht.com for updated information as it becomes available.
Steve Kogan, president of Builders, spoke with Supply House Times but said he could not be quoted regarding the pending legal issues. He said the family-owned company has been in business 55 years and had considered itself an “American success story.”