Home improvement companies and retailers have faced macroeconomic challenges over the last five years since the Covid-19 pandemic with sluggish home sales contributing to a decline in business.
A combination of rising interest rates, higher home prices, and fewer homes on the market has discouraged consumers from buying homes, which affects tertiary businesses that benefit from real estate sales.
Businesses selling furniture, home appliances, consumer appliances, and home improvement products have seen sales drop when home sales are stifled.
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Sales of previously occupied homes in 2024 declined to the lowest level since 1995 with 4.06 million sales, which was 0.7% lower than 2023, according to National Association of Realtor data.
Contributing factors included a 4.7% jump in the median home price to $407,500 in 2024 and the 30-year mortgage rate rising to about 7% earlier this year before dropping to about 6.6% currently, according to Freddie Mac.
Huge home improvement retailer LL Flooring felt the effects from rising home prices and interest rates last year as it on Aug. 11 filed for Chapter 11 bankruptcy protection seeking a sale of its assets. The debtor also suffered from broad headwinds in the repair and remodeling markets that occurred after the Covid-19 pandemic subsided.
LL Flooring reached an agreement to sell up to 219 stores and the company’s Sandston, Va., distribution center to a subsidiary of private equity firm F9 Investments for a purchase price including a $1 million fixed amount, an inventory price of 57% of landed cost value of acquired inventory and assumed cure costs.
Another home improvement retail chain, historic Kelly-Moore Paints, in January 2024 shut down all 157 of its retail locations and furloughed about 700 employees, in an out-of-court wind-down of all of its business operations.
The Irving, Texas company, which was founded in 1946, blamed its closure on the heavy financial burden of paying off about $600 million in asbestos claims settlements, the risk of millions of dollars in future asbestos claims and its inability to invest in solutions to solve longtime supply chain issues that worsened during the Covid-19 pandemic.
And now, a provider of home improvement services is heading for bankruptcy court.
Air Pros
Air Pros files for bankruptcy to sell assets
The parent company of huge HVAC system installation, repair, and maintenance company Air Pros has filed for Chapter 11 bankruptcy protection seeking a sale of its assets as it faces defaults on prepetition secured debt, underperforming business units, and ongoing operational challenges.
Related: Major hospital chain owner files for Chapter 11 bankruptcy
AFH Air Pros LLC and 19 affiliates filed their petition in the U.S. Bankruptcy Court for the Northern District of Georgia on March 16, listing $100 million to $500 million in assets and liabilities. The debtor owes over $250 million on a prepetition secured credit facility from Oct. 31, 2022, and owes about $45 million in general unsecured debt.
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The debtor’s largest unsecured creditors include C.M. Heating Inc., owed over $6.1 million; Despedida Holdings, owed over $3.7 million; and C&P Hansen Heating and Cooling, owed over $2.6 million.
The debtor is seeking approval of up to $20 million in debtor-in-possession financing from its prepetition lenders, which includes $10 million in new money and a $10 million roll-up of prepetition debt.
Air Pros will file a bidding procedures motion
The debtor plans to file a bidding procedures motion for a sale of its assets to a stalking-horse bidder in the next few days, according to the declaration.
The debtor, founded in 2017 in Fort Lauderdale, Fla., expanded in eight states — Alabama, Colorado, Florida, Georgia, Louisiana, Mississippi, Texas, and Washington — and currently employs 700 workers, operates 600 vehicles, and has provided services to hundreds of thousands of customers, according to a declaration by Chief Restructuring Officer Andrew D.J. Hede.
Air Pros operates eight other business units, including One Source Home Service of Colorado Springs, Colo.; Hansen Super Techs of Mobile, Ala.; Doug’s Service Company of Houma, La.; Air Force Heating & Air of LaGrande, Ga.; Dallas Plumbing & Air Conditioning of Dallas; Dream Team Heating & Air of Denham Springs, La.; CM Heating & Cooling of Everett, Wash.; and East Coast Mechanical Air Conditioning & Plumbing of Boynton Beach, Fla.
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