Category Archives: Bankruptcy

Shareholders of Dallas-based Tuesday Morning Corp. may be in the rare situation of owning some of the retailer after its expected exit from bankruptcy this fall.

Tuesday Morning, a retailer of gifts and home closeouts founded in 1974, filed for bankruptcy May 27 after all of its 700 stores were closed by the pandemic and it had no e-commerce business to make up any of the lost revenue.

U.S. Bankruptcy Court Judge Harlin DeWayne Hale on Friday approved the creation of a committee of equity security holders after denying the request twice before.

The Dallas judge said in his order that he now has greater confidence that there is a substantial likelihood that equity will receive a meaningful distribution."

Tuesday Morning stores have performed well since reopening, along with other retailers that sell home furnishings as Americans reacted to the pandemic by sprucing up their homes. Plus, the retailer has attracted 40 prospective buyers who have signed nondisclosure agreements to access confidential information. Several parties have signed nonbinding letters of intent, according to the judges order.

The judge previously said he would reconsider forming an equity committee if events changed the analysis. Theres little precedent for shareholders of public companies to come out with anything from a Chapter 11 reorganization. Thats because theres a strict hierarchy for who gets paid from the assets. Government taxes, lenders and other creditors, including utilities and merchandise suppliers, bondholders and preferred shareholders, are all paid ahead of common stockholders.

Tuesday Mornings stock price stopped trading on the Nasdaq at 28 cents a share on June 5 and has since been trading on the over-the-counter market, often called the pink sheets. The stock closed Friday at 63 cents a share, up 18 cents, or 40%.

Tuesday Morning said it will file bid procedures by Wednesday and anticipates a final sale hearing at the end of October. Next week, it said, it will also file a plan and disclosure statement to serve as an alternative to the sale process.

Hale said given how quickly Tuesday Morning is moving on the sale process, he believed that it was necessary to appoint an equity committee at this time to ensure that equity holders are able to participate meaningfully in the sale and plan processes in a streamlined and efficient way.

Unlike many retailer companies that were forced into bankruptcy because of debt, Tuesday Morning didnt have a problematic balance sheet. It lacked cash flow with stores closed, and because of uncertainty related to the pandemic, the bank wouldnt extend credit to the company.

As part of its reorganization, Tuesday Morning closed 132 stores through the end of July and 65 additional stores that started closing in August. It also closed a new distribution center in Phoenix. It was already in the process of retrofitting its 1.2 million-square-foot Dallas distribution center.

Twitter: @MariaHalkias

Looking for more retail coverage? Click here to read all retail news and updates. Click here to subscribe to D-FW Retail and more newsletters from The Dallas Morning News.

See original here:

Shareholders of Dallas-based bankrupt retailer Tuesday Morning may be in the money - The Dallas Morning News

Knotel is now facing a new lawsuit in San Francisco over unpaid rent; the flexible workspace company has active legal battles with landlords in New York, Atlanta, and Los Angeles. Regus Adds 6 NYC Locations to Chapter 11 Filing

The Real Deal reported this week that Regus has put half a dozen of its New York City workcenters into bankruptcy as the company seeks Chapter 11 protection for upwards of 100 locations across the country. Over the past six weeks, the company has added around 90 locations to its Chapter 11 filing. In a recent interview, Mark Dixon, CEO of Regus parent company, IWG, said the firm will be accelerating its plan to trim 4 percent of its global portfolio in response to Covid-19.

Bizjournals reported this week that lawsuits are stacking up against Knotel. According to reports, landlord Hudson Pacific Properties sued the company Wednesday over unpaid rent at a South of Market office building where Knotel has leased space since 2018. Hudson Pacific is seeking damages in excess of $393,498. The lease for that building is set to expire in April of 2027, but just 2 years in the flexible workspace provider is having a hard time making rent. The new suit adds to Knotels already mounting legal battles with landlords in New York, Los Angeles, and Atlanta.

The Latest NewsDelivered To Your Inbox

Flexible workspace provider, The Executive Centre, reported this week that its revenue in south Asia had grown by 18% in the first half of 2020. According to reports, the company reported $21 million in revenue and occupancy of 89% throughout the region. Global revenue for the company was up 5% despite the COVID-19 pandemic, and the number of workstations occupied as of June, 2020 increased by 14% compared to 2019. The company reported seeing strong demand for flexible space from domestic companies, which has helped the company recover from the pandemics impact.

For more flexible workspace and future of work news, visit our Daily Digest section!

Facebook Twitter LinkedInMessenger

Originally posted here:

In The Loop: Regus Bankruptcy, Knotel's Legal Woes Continue, And More Industry News - AllWork.Space

Dave & Buster's had to close all of its locations at one point, due to coronavirus Getty Images

Dave & Busters Inc. shares plunged 26.1% in Thursday trading after investors grew nervous about the possibility of the entertainment company filing for bankruptcy.

Dave & Busters PLAY, -26.13% included going concern language in a 10-Q filing dated September 10.

Between March 14 and March 20, all 137 Dave & Busters locations were closed due to the coronavirus pandemic.

Dave & Busters initially furloughed nearly all of its employees and, as of August 2, had reached 92 rent relief agreements, which includes rent deferrals. As of September 4, 52 locations were closed, according to the filing.

On September 10, the company reported an 85% decline in second-quarter revenue, to $50.8 million.

These developments have caused a material adverse impact on the companys revenues, results of operations and cash flows, including the companys ability to meet its obligations when due, the filing said.

These conditions raise substantial doubt about the companys ability to continue as a going concern for a period of one year from the date of the financial statement are issued.

Truist Securities analysts say the stock plunge is a severe overreaction, citing the identical language from a previous 10-Q. The stock dip presents a buying opportunity.

We continue to assume that Dave & Busters lenders will again grant covenant relief, especially given visibility into recovering EBITDA at that time as the company emerges from COVID crisis, analysts wrote.

Truist rates Dave & Busters stock buy with a $22 price target.

Dave & Busters stock has sunk nearly 65% for the year to date while the S&P 500 index SPX, -0.84% has gained 3.4% for the period.

Excerpt from:

Dave & Buster's stock plunges 26% on bankruptcy fears, but analysts say it's investor 'overreaction' - MarketWatch

The next big wave of U.S. bankruptcy filings wont happen until mid-2021, when companies that borrowed heavily to survive Covid-19 hit a wall, says bankruptcy attorney James Sprayregen of Kirkland & Ellis.

You could think of it as a rat of debt working its way through the snake, and it takes a while for that to happen, said Sprayregen, whose firm represented some of largest U.S. companies that went bankrupt during the pandemic. A big wave has already happened and we have a semi-hiatus for maybe the rest of the year, he said in a telephone interview Monday.

A distressed debt surge in the second or third quarter of 2021 will include bankruptcies and restructurings, said Sprayregen, a Kirkland partner who built its international restructuring group. Debt-for-equity swaps will also leave some companies with new owners, he said.

Besides energy, a large number of companies in the travel and leisure sector will need to address capital structures, according to Sprayregen, who splits his time between Chicago and New York.

After a boom in corporate distress when economies shut down to deal with the pandemic, 2020 had been expected to be the biggest bankruptcy year ever. The pace of bankruptcies was widely expected to pick up after last month, which was slower than May-July, but still the worst August on record.

The Covid Bankruptcies: Vegas Monorail to a New York Retail Icon

In the past week there were just four filings by companies with more than $50 million in liabilities, including iconic New York department store chainCentury 21 Stores. Thats down from six filings a week, on average, from April to July, but in line with Augusts weekly average.

Default RiskThere have been 187 bankruptcy filings year-to-date by companies with more than $50 million in liabilities, according to data compiled by Bloomberg. Thats the most for any comparable period since 2009, when there were 271 in the full year, the data show.

Global corporate defaults picked up after slowing in August, with five issuers added to the default tally last week, according to a Sept. 11 report from S&P Global Ratings, which highlights risk in CCC rated debt.

So far in 2020, 152 out of 171 defaults, or nearly 90%, were from entities rated CCC and below before default, said Sudeep Kesh, head of S&P Global Credit Markets Research.

Moodys Investors Service predicted more pain to come for global oilfield services and drilling companies. In a report published Monday, it cites elevated refinancing as a potential cause of bankruptcies.

Distress EasesThe total amount of distressed bonds and loans traded fell by 1.7% to $278 billion as of Sept. 11, the third straight week of declines. Thats down from $935 billion in March, data compiled by Bloomberg show. Volume of distressed bonds declined 0.9% while loans fell 3%.

There were 518 distressed bonds from 263 issuers trading as of Monday, down from 548 and 287, respectively, one week earlier. Thats significantly less than the 1,896 issues from 892 companies at the March 23 peak, Bloomberg data show.

American Airlines Inc. and Bombardier Inc. topped the ranks of issuers with the most debt trading at distressed levels that hadnt filed for bankruptcy as of Sept. 11, data compiled by Bloomberg show.

More:

Pandemic borrowing seen driving the next bankruptcy surge in 2021 - Asset Securitization Report

Regus CEO Mark Dixon with 175 Pearl Street in Brooklyn, 1325 Sixth Avenue and 1501 Broadway (Regus, Google Maps)

Short-term office company Regus put half a dozen of its New York City workcenters into bankruptcy as the company seeks Chapter 11 protection for upwards of 100 locations across the country.

Regus, which went through a bankruptcy restructuring in 2003 after the dot-com bubble burst, has put roughly 90 locations into Chapter 11 over the past six weeks, filings show.

The company has filed for six workcenters in Manhattan, Brooklyn and Long Island City in the past week.

Four of the locations are in Midtown: Paramount Groups 1325 Sixth Avenue at 53rd Street, Levin Properties 1501 Broadway in Times Square, Brookfield Properties 424-434 West 33rd Street in Manhattan West and EQ Offices 1740 Broadway at 56th Street.

The other centers are at Normandy Real Estate Partners 175 Pearl Street in Dumbo and Jamestown Properties Falchi Building at 31-00 47th Avenue in Long Island City.

A representative for Regus declined to comment. But in the half-year update from its parent company, Switzerland-based IWG, CEO Mark Dixon said the firm will be accelerating its plan to trim 4 percent of its global portfolio in response to Covid-19.

Whilst the Covid-19 pandemic continues, we expect our third quarter to be particularly challenging. We therefore remain sharply focused on maximising further cost savings in the coming months, he wrote in the August report, noting the company is working to build a large cash buffer.

Regus is the largest flex-office provider in the world, with about 10 times as many locations as WeWork. The company, founded in 1989, is largely seen as a barometer for the short-term office market, which has grown significantly in the past few years with WeWorks expansion driven largely by SoftBank.

As recently as last fall, Dixon was crowing that Regus was thriving as its younger, upstart rival was experiencing growing pains.

But the coronavirus has had a severe impact on the short-term office market, with a number of smaller players fizzling out. Regus bankruptcy filings are the most significant indicator yet that the pandemic pain may start to reach the industrys highest levels.

The majority of the sites Regus put into bankruptcy are in urban cores including New York, Chicago and San Francisco areas hard hit by the virus. The number of centers in Chapter 11 represent about 2 percent of the 1,000 locations the company has in the United States and Canada.

The company believes its clients will want to work in suburban offices closer to home, rather than in dense business centers.

Nearly $13 billion worth of commercial-mortgage backed securities loans have exposure to Regus locations, according to a recent report from Kroll Bonds Ratings Agency.

Contact Rich Bockmann

Original post:

Regus throws 6 NYC locations into bankruptcy - The Real Deal

Century 21, which blamed its decision to shut down on its property insurers, wants to bring the legal fight over Covid-19 coverage to bankruptcy court.

The New York-based department store chain this week said it could have been saved if insurers agreed to pay about $175 million it says it is owed under policies to protect against business disruptions.

The designer discounter, which sought bankruptcy protection Thursday, is asking a New York bankruptcy judge to hear its case against its insurers quickly, so if victorious, it can collect on its policies. The family-owned department store sued its insurers in July in New York state court, after government restrictions in response to the pandemic forced it to close down.

The bankruptcy court, however, is unlikely to issue a decision or speed up a settlement that would result in a payout to Century 21, said bankruptcy lawyers not involved in the case who were interviewed by The Wall Street Journal. And even if it does, that decision wouldnt save the storied retailer, they said.

The bankruptcy court may decide not to take over the lawsuit against insurers.

Original post:

Century 21 Wants to Move Covid-19 Insurance Fight to Bankruptcy Court - The Wall Street Journal

DWayne Prieto and 115 Cedar Street in New Rochelle (Linkedin, Google Maps)

A hotel project pegged as a catalyst for the revitalization of downtown New Rochelle just filed for Chapter 11 bankruptcy.

A company tied to a luxury Wyndham hotel planned for 115 Cedar Street made the bankruptcy filing Sept. 11 in federal court. The hotels developer is Ward Capital Management, a real estate investment firm based in nearby Dobbs Ferry.

The hotel project the largest in Westchester County in 20 years owes creditors $4.67 million, including $715,000 to prolific hotel architect Gene Kaufman. It has assets of $4.1 million, according to the filing.

Ward Capital Management secured New Rochelles approval to build a 24-story, 225-key hotel last summer. The project was part of the citys larger goal to revitalize its downtown area to attract younger residents.

DWayne Prieto, the managing partner and CEO of Ward Capital, is the husband of Jewelle Prieto, founder and co-owner of the now-shuttered restaurant and nightlife spot Don Coqui, which operated at the site for years.

Amenities at the 245,000-square-foot hotel tower planned to include a restaurant and bar, a spa, a rooftop pool and grill, valet parking and conference space. The hotels expected completion date was June 2021.

An attorney representing the hotel, Kevin Nash of Goldberg Weprin Finkel Goldstein, did not immediately return a request for comment. Ward Capital Management declined to comment. Court records show the partners in the project are in litigation; the bankruptcy filing could be a means to resolve their dispute.

Hotels have been slammed by the pandemic, as tourism and business travel have been virtually nonexistent since March.

The Courtyard by Marriott in Herald Square just revealed it will not reopen, and a few weeks ago, the Hilton in Times Square also announced it is closing permanently. The 478-room hotel at 234 West 42nd Street disclosed its plans to permanently shutter in a filing with the New York State Department of Labor.

View post:

Largest Westchester hotel project in 20 years files for bankruptcy - The Real Deal

The coronavirus pandemic has been brutal to small businesses. Nearly 79% of small businesses have felt a moderate-to-large negative effect from the pandemic, according to an August 2020 U.S. Census Bureau Small Business Pulse Survey.

I never would have imagined myself in this position, says Nicole Rosen, founder of Mizfit Inc., a company that provides after-school and summer dance classes to schools across South Florida. Rosens company successfully applied for a Paycheck Protection Program (PPP) loan to help maintain payroll and operations, but without the same level of demand or ability to hold in-person classes, she still had to let several employees go and dip into savings to stay open.

Im pivoting and doing whatever I can to survive, Rosen says.

Although the PPP was touted by U.S. Treasury Secretary Steven Mnuchin as a huge success, with government data indicating the forgivable loan program supported more than 51 million jobs, the sustained economic downturn and its resulting effect on small businesses has stretched far beyond anyones expectations, leaving many businesses wondering what else they can do to survive.

While Republicans have touted reopening the economy as a way to save small businesses, it may not be the panacea that business owners hope for.

In New York, for example, restaurants will be able to host indoor dining at 25% capacity starting on Sept. 30. But many restaurateurs fear that the revenue generated by this reduced capacity wont be enough to save their businesses, nor hire back all of their employees.

In an interview with the New York Times, Eric Ripert, chef at Le Bernardin, said, I know I can make it work at 50 percent, but the expenses of getting it up and running, versus the revenue, my gut tells me it will not work at 25 percent.

Some business owners have pinned their survival hopes on another round of PPP. But the Senate failed to pass its latest stimulus bill, and with lawmakers stuck in a months long stalemate, there may be no relief before the end of 2020.

As the funds from CARES Act programs like the PPP and the Small Business Associations (SBA) Economic Injury Disaster Loan (EIDL) Advance grant are depleted, small business owners are left wondering if they can survive untilor even ifadditional government aid arrives.

The [CARES Act] kind of cushioned the immediate impact but didnt fix anything long term. says Ike Shulman, co-founder of the National Association of Consumer Bankruptcy Attorneys (NACBA). There are going to be people filing for bankruptcy that never had a clue theyd need a bankruptcy lawyer.

When a business has already exhausted its PPP loan but sales havent rebounded, whats the next move?

Small business owners waiting on negotiations about future aid may consider turning to other avenues, although each comes with its own potential pitfalls.

Fast cash options, which are lines of credit issued to a small business and often backed by a personal guarantee, have proliferated over the past few months. And although it may seem appealing to get money quickly to tide you over, these types of loans often come with sky-high interest, says Leslie Tanye, a lawyer and founder of debt solutions law firm Tayne Law Group, P.C. in Melville, New York.

In todays environment alternative funding is limited, loans are more restricted, Tayne says. It becomes a Catch-22 for a business owner: What do you do to get money and how do you keep your business up?

Although there are low-cost small business loan programs available, including the SBAs EIDL program, the Federal Reserves Main Street Lending Program (MSLP) and Community Development Financial Institutions (CDFI loans), the thought of owing money can be unappealing without a clear path on how to repay it.

I dont owe anybody any money, I dont want to owe anybody any money, says Joey Ball, who owns several franchises in the greater Los Angeles metropolitan area. Its going to be a hard decision to think that youre either going to have to borrow money to stay afloat or to just file bankruptcy and wait for this to blow over and start again.

Ball says he received PPP funding, but the money he received for all seven of his businessesincluding five massage and skin care salons, one waxing salon and one tanning salonhas now been spent. His businesses are closed, and he anticipates at least two of them will never reopen.

Ball also says many of his employees have moved on to other jobs now that the federal $600 unemployment benefit has ended, making it near-impossible to reopen even if he could.

The only thing at this point thats going to save me is a second round of PPP, Ball says. Basically the government is controlling my destiny.

Closing your doors permanently may not be your only option.

The natural inclination is people dont want to file [for bankruptcy], theyll do whatever they can to stay afloat; but if the mountain of debt that they are facing is so large that they know its a real possibility, then the earlier they the get organized the better, Shulman says.

Another option may be debt negotiation.

Renegotiating your debts with an experienced financial attorney, especially if you have assets, allows more flexibility than in bankruptcy, Tayne says. Obviously bankruptcy is an option but its complicated and expensive. Often small business owners have mixed personal funds with business funds. And, when someones personal monies are enmeshed with their business funds, it can make it exceedingly difficult to tell which is which, a requirement for a bankruptcy proceeding.

Tayne recommends taking stock of any business assets you can potentially either sell off or use as a negotiating chip with creditors, along with taking a hard look at your cash flow to see if your business is sustainable in the current economic environment.

Renegotiating debt can also have less of an impact on your business and personal credit. It depends on the type of business you have, but a business bankruptcy can stay on your personal credit report for seven to 10 years, and on your business credit reports for up to 25 years.

There are generally two types of business bankruptcy options:

Theres a provision of Chapter 11 that may make it more palatable to smaller business owners trying to buy time until the economy bounces back. Within the Small Business Reorganization Act of 2019 (SBRA), theres an option that allows business to spread administrative fees out over three to five years versus the traditional upfront payment of administrative costs.

Before taking action, consult with an attorney to help determine your next steps. Many bankruptcy or financial attorneys offer free consultations before you have to commit to working with them or taking legal action. Most states have legal aid societies or lawyers who will take cases pro bono or at a drastically reduced cost for those who qualify financially.

Read the original here:

Small Businesses Continue To Suffer Pandemic Pain. Is Bankruptcy The Answer? - Forbes

CENTER VALLEY, Pa. - It's a record summer for bankruptcies.

The number of bankruptcies is up over 200 percent from July and August of last year and expected to get worse as the economy continues to stall.

"We're going to see a lot more bankruptcies because many, many businesses are trying to hold on as much as they could," saidKamran Afshar, an economist with DeSales University.

"Still, we are not going to see many of these jobs come back because like every recession businesses learn how to do the same job more efficiently."

Currently, most of these bankruptcies are from larger companies like Stein Mart, Chuck E. Cheese, and Brooks Brothers to name a few.

But small business might not be that far behind them.

Charles Laputka is a bankruptcy lawyer in Allentown. Although locally, he says filings have been down he expects them to go up as government aid stops.

"And I expect bankruptcies to pick up again probably January, February, March," Laputka said.

And for many small businesses they might be too broke to file for bankruptcy.

"And they have to put down-in the Lehigh Valley-anywhere between $10-$25,000 upfront just to begin the case. And then it's billed hourly after that,"Laputka said.

"Generally, always, the rate of business failure is higher than bankruptcy. Now significantly more so,"Afshar said.

However for those who, unfortunately, will have to file it might not be the black stain it once was.

"In this type of situation I believe there's going to be a lot of wiggle room in bankruptcy, will not be as negative as it has been in the past. You know COVID will excuse a lot of sins,"Laputka said.

Originally posted here:

Record number of businesses filed for bankruptcy this summer. That could be just the beginning - 69News WFMZ-TV

Buy Photo

Briggs & Stratton's plant at 3300 N. 124th St. in Wauwatosa is shown June 30, 2020. At one time the company employed thousands at four plants in the area. Now it's down to a few hundred people, and that's about to drop even further with the company moving production to a nonunion plant in New York.(Photo: Angela Peterson / Milwaukee Journal Sentinel)

Small engine manufacturer Briggs & Stratton Corp., founded in Milwaukee in 1908, on Monday filed for bankruptcy protection with plans to sell its assets to a private equity firm that specializes in manufacturing and has done previous deals in Wisconsin.

Briggs filed for Chapter 11 in the U.S. Bankruptcy Courtfor theEastern District of Missouri. Under Chapter 11, a company and its creditors work out a reorganization plan that enables the business to continue to operate.

Briggs, the world's largest manufacturer of small gasoline engines, employs about 5,000 people worldwide including around 1,300 in the Milwaukee area. Years ago, the company had 11,000 employees just in Wisconsin.

As part of the bankruptcy, KPS Capital Partners LP, a New York private equity firm, agreed to buy all of Briggsassets for approximately $550 million.

The so-called stalking horse bid sets a minimum price for the sale.

The offer would need court approval and could still be topped by another bidder, but for now it's probably "the best outcome they could come up with," said analyst Tom Hayes with Northcoast Research.

The manufacturer of small engines used in outdoor power equipment around the world said it arranged for $677.5 million of debtor-in-possession financing that would help fund operations during the bankruptcy proceedings. KPS said it agreed to provide $265 million of that amount as part of the reorganization.

"KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions. The new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor's significant liabilities," Michael Psaros, co-managing partner of KPS, said in a statement.

The private equity firm also said it has entered into an agreement in principle with the United Steelworkers of America for a new collective bargaining agreement for Briggs hourly employees represented by the union in the Milwaukee area. The agreement would become effective upon completion of the acquisition and reorganization.

"KPS has a proven track record of investing in manufacturing facilities and operating them profitably and sustainably," Steelworkers President Tom Conway said in a statement.

Retirees, on the other hand, are losing their supplemental health and life insurance.

On Sunday, Briggs' board of directors voted to terminate the group insurance plan for retirees. "Your health and life insurance coverage (under the plan) will end on August 31, 2020. Any eligible claims incurred on or before August 31 will be covered by the plan," the company said.

"There will be some effect on the pension obligations. This will be covered by the bankruptcy court," company spokesman Rick Carpenter said in an email to the Journal Sentinel, referring retirees to a frequently asked questions document.

Briggs & Stratton joins other large companies many of them in the retail and energy sectors that have filed for bankruptcy in recent months.

Briggs was losing money and burdened by large debts when the economic downturn caused by coronavirus hit. Its sales fell by $107 million, or 18%, to $474 millionin its thirdquarter ended March 29, compared with the same period a year earlier.

The company warned that its losses, the pandemic and pending debt payments raised substantial doubt about its ability to continue as a going concern. Yet in June, while it skipped a $6.7 million interest payment, the company awarded its executives and other key employees more than $5 million in cash retention awards.

Such awards are often given before a company files for bankruptcy.

"Whether you like the management team or not, they likely get to stay in place for the foreseeable future," Hayes said.

Briggs makessmall engines, residential and commercial lawn and garden equipment, portable generators, pressure washers, snow throwers and other outdoor power equipment. The companys products are sold in more than 100 countries under such brands as Briggs & Stratton, Victa, Simplicity, Ferris, Billy Goat, Vanguard, Branco and Allmand. It also sells engines to other manufacturers, including Deere & Co., the Toro Co. and Viking.

Briggs has plants in Wisconsin, Alabama, Georgia, Missouri and New York as well as Australia and China. The company recently said it was cutting more than 200 jobs in Wauwatosa as part of an earlier announced move of production work to its factory in Munnsville, New York.

It's unknown yet whether Briggs will eliminate more jobs.

"I don't think they can do a lot more trimming" without shedding product lines, Hayes said. "The plants have been consolidated. I don't think it would make sense to offshore other production."

Briggs short-term debt includes $195.5 million in bonds due in December. That debt had to be refinanced by Sept. 15or the company would be in violation of its loan agreements with a consortium of banks, enabling them to demand immediate repayment.

The company had planned to do that by selling some businesses.

They kind of boxed themselves in a corner, Hayes said.

In March, Briggs announced plans to sell its commercial turf products business, sold under brand names such as Ferris, Billy Goat, Simplicity and Snapper, and its pressure washer and portable generator product lines.

"It seems like they took that off the table for now," Hayes said.

The smaller company would focus on engines for residential outdoor power equipment, commercial engines, standby power generation and commercial battery systems.

"Technological advances are increasingly making battery-powered products competitive with engine-driven equipment in terms of performance, principally on the residential side, as well as the commercial side to a lesser degree," Briggs said.

The company hasmore thanhalf of the engine market for residentialoutdoor power equipment and established brands.

Dan Ariens, president and CEO of AriensCo., a Brillion-based manufacturer of lawn and garden equipment and snow throwers, said he was surprised that Briggs wasn't able to avoid Chapter 11 even as the engine maker has struggled.

KPS has made investments in Wisconsin paper mills and Waupaca Foundry. The firm says companies in its portfolio operate 150 manufacturing plants in 26 countries, with about 23,000 employees.

"The statement that KPS put out sounded like the right plan. The Briggs brand is very strong, and I think the focus on that will be good," Ariens said.

The company was founded in 1908 by Stephen Briggs, an inventor, and Harold Stratton, an investor, and incorporated in 1910. It initially grew by making parts for the booming automobile industrystarter switches were an early core product small engines for such revolutionary products as washing machines as well as garden tractors, cultivators and generators.

In 1953, it introduced the first lightweight aluminum engine that found a ready market in lawn mowers just as Americans were flocking to the suburbs. The company produced more than 2 million engines a year on average throughout the 1950s.

Briggs had four manufacturing plants in the Milwaukee area at one time. But the company, which was hurt by an increase in foreign competition in the 1980s, also had a history of conflict with labor unions and over the decades moved much of its manufacturing to other states.

The company also has a history of opening and then closing plants in Wisconsin, Missouri, Kentucky, Tennessee, Alabama and other locations.

Briggs closed its plant in Port Washington in 2008 and its plants in Jefferson and Watertown in 2009.

In 2007, it closed its engine plant in Rolla, Missouri, that once employed up to 800 people moving much of that production to China. In 2012, it announced the closing of a plant in Newbern, Tennessee, resulting in the loss of almost 700 jobs. It also closed its plant in the Czech Republic that year.

The company hasnt hada consistent path in recent years, Hayes said.

Its been, Let me turn this dial and turn that dial, he said.

Trading of Briggs shares was halted Monday morning as the share price hovered at around 77 cents.

Moody's Investors Service downgraded the company's probability of defaulting on $195 million in outstanding debt.

"The downgrades reflect Briggs & Stratton's substantial earnings decline and inability to generate positive annual free cash flow which, exacerbated by the coronavirus outbreak, accelerated the company's missed interest payment and ultimately, bankruptcy filing," Moody's Vice President Gigi Adamo said in a statement.

"Absent the bankruptcy filing, the expiration of the missed interest payment grace period on the company's $195 million outstanding notes due December 2020 would have allowed noteholders to accelerate the payment of principal and accrued interest," Adamo added.

Autoplay

Show Thumbnails

Show Captions

Our subscribers make this reporting possible. Please consider supporting local journalism by subscribing to the Journal Sentinel at jsonline.com/deal.

Read or Share this story: https://www.jsonline.com/story/money/business/2020/07/20/briggs-stratton-company-founded-1908-files-bankruptcy-protection/5470618002/

Read the rest here:

Briggs & Stratton files for bankruptcy protection, plans to sell assets and continue operating - Milwaukee Journal Sentinel