If you are here to find out answers to the hottest topic on the internet right now: Is Kelly-Moore going out of business? Then you have landed just right.
Kelly-Moore, after being over 80 years in operation, has decided to cease operations abruptly. What led this leading paint company to such a pitfall? Can filing for bankruptcy save the company?
Make sure you read the article through to find out what’s happening with Kelly-Moore.
Kelly-Moore was founded in 1946 by William Kelly and William Moore in San Carlos, California. For the past 80 years or so, the company has been a staple and leader in the paint industry.
During its time in the business, the company focused on providing high-quality, innovative products with exceptional service to customers, which was the reason behind its long-served legacy.
However, it’s the end of the road for Kelly-Moore now, as the company has exhausted every possible way to save itself from the impending closures. Keep on reading to find out what led the company to such a fate.
Is Kelly-Moore Going Out of Business?
Yes, Kelly-Moore is going out of business owing to the unsurmountable debt it has accumulated from asbestos-related litigation over 20 years.
The paint supply company made an abrupt announcement recently saying that it will shut down all of its 157 stores and cease operations permanently.
The shocking decision came a day after the company laid off 700 employees and temporarily stopped operations in a manufacturing plant in Hurst, TX, in the hope of returning to full operations.
“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,” said Gassenheimer. “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,” Kelly-Moore’s CEO said in a statement.
Why is Kelly-Moore Going Out of Business?
The biggest reason Kelly-Moore accumulated a debt of $600 million was because of multiple lawsuits filed against the company for using asbestos in their products.
The company started getting slammed with these lawsuits in the late 1990s and early 2000s.
Throughout the mid-century, asbestos has been a widely used product in producing paint and other texture-related materials. However, asbestos is known for being a health hazard and is linked to causing the development of mesothelioma.
The government banned the use of asbestos in 1989, and Kelly-Moore said that it stopped using it in their products in 1981. In spite of this, Kelly-Moore was slammed with lawsuits, the total of which amounts to $600 million today.
Kelly-Moore somehow paid $600 million in lawsuits over the past twenty years. But it still has over $170 million in future legal liabilities, along with an undisclosed sum of unpaid sales and use taxes.
Will Kelly-Moore File For Bankruptcy?
It’s not like the company didn’t put attempts at remediation. In October 2022, a private equity firm named Flacks Group acquired Kelly-Moore.
After the acquisition, Charles Gassenheimer became the company’s CEO, and the company moved its headquarters to Texas from California, closer to its production unit, in an attempt to improve production. Suffice it to say, the efforts were rendered fruitless.
The company also sought financial assistance from Houlihan Lokey to obtain the necessary capital. However, no investor showed any interest.
Not only this, the company also worked with outside professionals to assess and improve its liquidation situation. They tried to look for opportunities for mergers, reorganization, potential sales, new capital investment, Bankruptcy, etc., but all the efforts failed.
“Our owners took on significant financial risks in the acquisition last year,” Gassenheimer continued. “Unfortunately, despite their extraordinary efforts after acquiring this distressed business, they simply couldn’t overcome the unexpectedly large challenges, and will be exiting the business.”
What’s Next For Kelly-Moore?
The company is yet to address the news of closure on its social media channels and homepage.
During the wind-up process, the company will try to fulfill previously placed orders to its full capacity. The orders would be fulfilled from existing inventory kept at the Union City, CA, distribution facility.
The company has furloughed 700 employees already. In a press release, the company said that their former workers 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 could not be prouder of what our talented team accomplished under extremely challenging circumstances. 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,” Gassenheimer concluded. “Unfortunately, this was the only viable alternative remaining for us after evaluating all other potentially feasible options,” the company said.
Everything has an expiry, and sometimes, no matter how much effort one puts in, some things just can’t be saved.
This is exactly what has happened with Kelly-Moore. The company, in spite of trying everything in its power, be it looking for investors, filing for bankruptcy, etc., failed to find any relief.
So now, sadly, it’s the end for Kelly-Moore, and the company, after serving for decades, is finally closing down.
We hope you found the answer to your question: Is Kelly-Moore Going Out Of Business in this guide.
What happened to Kelly-Moore?
The paint supply giant, Kelly-Moore, announced on Friday that it would cease operations immediately, citing financial constraints as the reason for the same.
Who acquired Kelly-Moore?
Flacks Group, a Florida-based private equity firm, acquired Kelly-Moore in September 2022. Flacks Group bought Kelly-Moore’s distributing, retailing, and manufacturing units at the time of acquisition.
Is Kelly-Moore and Benjamin Moore the same company?
No, Kelly-Moore and Benjamin Moore are not the same company. Although both companies have “Moore” in their names, they are different paint manufacturers and are definitely not the same.