Stock Building Supply cleared another major hurdle today as the company looks to emerge from Chapter 11 bankruptcy.
In U.S. Bankruptcy Court in Wilmington, Del., no additional objections were raised toward Stock's bankruptcy plan, which calls for the dealer to break another 60 leases. More than 200 leases were rejected in Stock's original bankruptcy plan and approved by the court in May.
According to attorneys representing Stock, nine objections to the plan have been remedied. An objection from the Internal Revenue Service, for back taxes not filed by Stock, has also been rectified. The dealer is slated to file any previous absent tax returns by July 12, 2009.
"I congratulate you on a job well done," bankruptcy judge Mary Walrath told Stock and its attorneys at the finale of today's proceedings. The matter is now adjourned until Walrath schedules a final confirmation hearing.
Getting the leases rejected was a condition set by the Gores Group, a private equity firm based in Los Angeles, for it to agree to take a 51% interest in Stock from Wolseley Plc on May 5 and enter into a joint-venture agreement with the British giant. Stock filed the next day for protection from creditors under Chapter 11 of the federal bankruptcy statutes.
Stock has closed about 165 facilities between mid-2006 and mid-2009. Stock said in Chapter 11 filings that restructuring and impairment costs related to those closures totaled $430 million in the fiscal year ended July 31, 2008. Wolseley said it ran up $235 million in exceptional costs relating to Stock's cuts in the nine months ended April 30. Since then it has made plans to close nearly 150 other facilities (see map and spreadsheet compiled by ProSales.) Stock hasn't said how many locations it it will close, but it has said it envisioned the company's payroll shrinking from roughly 7,200 on May 6 to about 5,000.
"The court's confirmation of our plan is a major milestone in the recapitalization of our business," Joe Appelmann, Stock's president and CEO, said in a statement after the court session. "We have taken a very hard look at our business, taking proactive steps to reshape the company and realign it with the current market reality. The reorganization process will allow us to emerge as a stronger company, better positioned to continue to deliver exceptional service to our customers. I want to thank all of our hardworking associates around the country who, throughout this difficult chapter in our history, have maintained their focus and dedication to providing the U.S. market with the highest quality service and products."
Based on previous court filings, Stock has projected net sales will slide from $5.29 billion in the year ended July 31, 2006, to $3.46 billion in the 12 months ended July 2008, to roughly $2.11 billion this fiscal year and then to $1.02 billion in fiscal 2010.