Armstrong files for protection under chapter 11

Home Featured Post Armstrong files for protection under chapter 11

Armstrong Flooring has filed for Chapter 11 bankruptcy protection while it continues to pursue a possible sale of the company.

Armstrong, which filed for bankruptcy alongside its licensing and Latin American affiliates, asked for court approval for $30 million in senior-secured debtor-in-possession financing. “With the support of our board of directors, we have determined that using the Chapter 11 process to effectuate a potential sale is the right next step for our company,” Michel Vermette, Armstrong CEO, said in an internal announcement.

The company’s filings list $317.8 million in total debts. Its $160.5 million in long-term secured debt is broken down into a $62.5 million revolving credit facility and a $98 million term loan, according to the filings.

Vermette said the company launched an effort to modernize operations and increase profits in early 2020, and had expended “significant resources” when the COVID-19 pandemic hit. “Among other things, the company faced extended shutdowns of certain manufacturing facilities, supply chain disruptions, inflation and an overall decline in sales of flooring products,” he said.

Armstrong Flooring subsequently cut costs and began to see some improvement in 2021, but profits were still hampered by inflationary pressures and supply chain problems, according to Vermette. The company began negotiations with its lenders and ultimately reached an agreement in December 2021 that significantly restricted its business operations, in part imposing an “onerous” cash dominion arrangement and requiring Armstrong to keep certain levels of inventory and accounts receivable, according to the release.

Armstrong Flooring
Armstrong Flooring had cut costs and began to see some improvement in 2021, but profits were stymied by inflationary pressures and supply chain issues.

The lenders also required the company to find a buyer by the end of March—a date that was later extended to May 8—which Vermette said resulted in significant employee attrition, customers reducing their orders and vendors demanding better terms. Talks with the most promising potential buyer broke down in April, though, and attempts to find another buyer were unsuccessful before the deadline, Vermette noted. “The sale process is continuing, and Armstrong Flooring hopes to consummate an orderly sale of the entire business or its core assets as soon as practicable.”

Armstrong, which operates six manufacturing plants in the U.S., China and Australia and sells in the North American commercial and residential markets as well as in commercial markets in the Pacific Rim, has retained Riveron Consulting as its financial adviser and Houlihan Lokey as its investment banker.

Distributors weighs in

The Chapter 11 resolution will have ramifications for Armstrong’s flooring wholesaler partners. The company’s management sent out a letter to distributors explaining that, from their perspective, it will be business as usual as they go through the process.

“Without being on the inside, I am somewhat at a loss to project outcomes,” said Scott Rozmus, president/CEO of Romeoville, Ill.-based FlorStar Sales, a top 20 flooring distributor. “I think the marketplace and channel will know a lot more once the bankruptcy [court] rules on the various motions and we receive more guidance from Armstrong Flooring’s management team. It’s not entirely clear what the go-forward will be right now.”

Must Read

8 ways to drive more website traffic from Instagram

(This story was originally published on and was edited for content and style.) Driving traffic from Instagram is one of the best marketing tactics...

Spartan Surfaces acquires Source One Contract

Bel Air, Md.— Spartan Surfaces acquired Source One Contract, turning a long-time relationship into a long-term partnership, the company said. Bringing on its team...

SBA establishes centers for women-owned businesses

Washington, D.C.—The U.S. Small Business Administration (SBA) recently announced the opening of five new Women’s Business Centers (WBCs) during National Small Business Week earlier...

Mannington Commercial supports Design Your World Miami

Miami, Fla.—Following a successful Chicago launch in 2021, Mannington Commercial said it will serve as a sponsor for IIDA’s expansion of its Design Your...

Torlys receives ‘Great Place to Work’ certification

Toronto—Torlys has once again been certified as a Great Place to Work after a thorough, independent analysis conducted by Great Place to Work Institute...

Total Solutions Plus unveils conference highlights

Indian Wells, Calif.—The 13th annual Total Solutions Plus will again be hosted here November 6-8, 2022. The purpose of event is to annually bring...

As seen in

May 9/16, 2022

Some text some message..