Hardware Retailing The Industry's Source for Insights and Information
Kelly-Moore Paints announced it plans to immediately cease operations and out-of-court “wind down” process all of its business.
As it begins to cease operations, the company will continue to fulfill previously placed orders from its existing inventory at its Union City, California, distribution facility. Effective immediately, all other company operations will be permanently closed, including its manufacturing facility in Hurst, Texas, which announced it would be furloughing approximately 700 employees earlier this month.
Kelly-Moore employees will be fully compensated for regular time worked, and management will continue its efforts to collect receivables to pay all accrued benefits including paid time off.
“I’m extremely disappointed and saddened by this outcome, as the entire Kelly-Moore team made incredible efforts to continue innovating and serving the unique needs of professional painting contractors,” says Charles Gassenheimer, Kelly-Moore Paints CEO. “The ownership group’s commitment from day one was to fix the business if we could. Sadly, no matter how great the Kelly-Moore team, products and reputation for service, we simply couldn’t overcome the massive legal and financial burdens that have been weighing on the company for many years.”
When the company announced its furloughs earlier, it had several interested investors with whom it was working, hoping to allow for a return to full operations. None of the interested parties have put forth letters of intent and the company has not secured any additional funding to continue operations.
“I could not be prouder of what our talented team accomplished under extremely challenging circumstances,” says Gassenheimer. “My deepest sympathy goes out to our loyal employees, customers, industry partners and the communities where we do business, who have supported Kelly-Moore throughout its long history. Unfortunately, this was the only viable alternative remaining for us after evaluating all other potentially feasible options.”
Through the cumulative cash drain caused by legal settlements and the cost of defending ever-continuing case filings, the company’s ability to reinvest in the business—including investments needed to address historical supply chain challenges that were exacerbated by the recent pandemic—has been severely constrained for an extended time.
The company has also been impacted by insurmountable legal liabilities inherited by the current ownership group from its 2022 acquisition of the company, including millions of dollars of previously unpaid sales and use taxes. The company is pursuing its legal rights concerning these claims.
Since taking over the company in 2022, Gassenheimer implemented multiple strategies to improve the company’s financial position, such as relocating the company’s headquarters from California to Texas, searching for new supply chain partnerships, upgrading previous stores and resolving much of its pending asbestos litigation.
Neither a bankruptcy reorganization nor an in-court liquidation is viable or advantageous given the company’s inability to fund its continued operations, as well as the fact that the company leases all its facilities and has no unencumbered hard assets that could be made available for distribution to creditors.
