Bankruptcy Deal Clears Path for True Value’s Sale to Do it Best
In a significant development, True Value Company has reached an agreement with its lenders to avert liquidation and expedite its Chapter 11 bankruptcy proceedings. This agreement facilitates the company’s reorganization and advances the planned sale to Do it Best.
During a hearing on Oct. 31, before U.S. Bankruptcy Judge Karen Owens in Delaware, True Value’s legal representative, Robert Drain, announced the agreement. The deal permits True Value to utilize cash collateral to fund its Chapter 11 case, with a stipulation that the sale must yield $163 million to satisfy its pre-petition lenders.
The agreement designates Do it Best as the stalking-horse bidder, proposing a $153 million bid. To ensure that lenders receive the required $163 million, Do it Best will provide up to an additional $10 million. This arrangement allows True Value to proceed with the sale while meeting its financial obligations to lenders.
The parties have proposed an accelerated timeline for the sale process, aiming for an auction on November 11, a sale hearing on November 12, and a target closing date of November 22. This schedule advances the original anticipated closing date of December 6, as outlined in court documents.
Judge Owens expressed approval of the agreement, saying, “I’ll sleep much better tonight, and I know you will, too.”
The agreement also includes the removal of a previous requirement for True Value to maintain a minimum level of inventory, reflecting confidence that sufficient inventories will be available during the sale process.
This development follows earlier negotiations where PNC Bank, the agent on a 2018 secured loan, objected to True Value’s use of cash collateral, citing concerns over adequate protection of the lenders’ interests. The resolution of these objections through the current agreement allows True Value to continue operations and pursue the sale without the threat of liquidation.
Bradford Sandler, the attorney representing the unsecured creditors, noted that the committee and other parties “literally were working around the clock” to reach an agreement. He described the settlement as a “terrific result” from the committee’s perspective, expressing confidence that the sale will close as planned on November 22.
This agreement marks a pivotal step in True Value’s efforts to restructure and continue serving its network of independently owned retail stores. The expedited sale process aims to preserve jobs and maintain the company’s longstanding presence in the hardware industry.
