After weeks of falling stock prices, withholding payments and speculation of trouble, Franks Nursery & Crafts, Inc. announced last week that it filed for Chapter 11 voluntary liquidation bankruptcy protection in the Bankruptcy Court for the Southern District of New York.
Franks intends to conduct an orderly liquidation of its assets for the benefit of all of its creditors, Franks said in a press release. Since emerging from a prior Chapter 11 bankruptcy proceeding in May 2002, Franks has worked diligently in an attempt to return its operations to profitability; however, due to a general weakness in economic conditions, a steady decline in customer traffic and unfavorable weather patterns causing a decline in all markets, Franks has sustained significant losses from operations. Despite its efforts to maintain a core group of its retail locations as a going concern, Franks ultimately concluded that it did not have sufficient financing to continue operating such locations.
Franks has entered into a $27.5 million debtor-in-possession financing facility with Kimco Capital Corporation, which will provide it with liquidity sufficient to dispose of its assets in an efficient manner. Upon approval of the Bankruptcy Court, Franks will begin conducting going-out-of-business sales at each of its 169 retail locations and will sell its real property and leasehold interests.
Concerns for the company hit several weeks ago as the stock prices for the company continuously fell and did not trade for days at a time. According to an article in The Detroit News, “Its [Franks’] stock, which traded for as much as $1.40 a share during the past year, closed at 26 cents a share — down 13 percent — Tuesday afternoon in over-the-counter trading.” In Mid-July Franks also hired a new CEO to try to help the company out of the slump it was in.
More and more calls started coming in to Franks from vendors complaining of late payments and the cancellation of orders for the upcoming holiday season. Industry sources also say that many growers who supplied Franks with product were told not to ship for fall several weeks ago, leaving millions of dollars in unsent product just sitting in the greenhouse with no where to go.
According to The Detroit News, Franks laid off an undisclosed amount of employees on Tuesday as the stock continued to fall. GPN has since learned that almost all employees at the corporate headquarters have been laid off, except for a skeleton crew that is left to take care of store closings and final Chapter 11 details. “One man, who identified himself as a 51-year-old accounting employee, said he was fired Tuesday along with 80-90 percent of the company’s staff,” reported The Detroit News. “He described an emotional scene that played out earlier in the day with long-time employees crying upon hearing they had lost their jobs.” No one from Franks could be reached for comment on any of this information.
Frank’s Nursery & Crafts, Inc., headquartered in Troy, Mich., operates the largest chain (as measured by sales) in the United States of specialty retail stores devoted to the sale of lawn and garden products.