Bankruptcy Judge Grants Bison's Initial Ch. 11 Requests July 1
Bison Cites Housing Slump, Credit Squeeze for Going Into Chapter 11 June 30
Bison Building Materials Files for Chapter 11 June 29
A federal bankruptcy judge in Houston delayed by one week a hearing on Bison Building Materials' Chapter 11 filing. Judge Wesley W. Steen pushed the date for the next court appearance to the morning of July 24.
Bison, the 14th-ranked dealer on the 2009 ProSales 100, filed June 28 for protection from creditors under Chapter 11 of the federal bankruptcy laws. On July 1, Steen granted Bison's opening requests and extended until Aug. 27 the deadline for Bison to reveal its financial plans and list of top unsecured creditors. The July 24 hearing will cover such issues as secured financing, liens, and scheduling a final hearing.
Chapter 11 is designed to give time for companies under its protection to pay debts and arrange financing. While Bison is in Chapter 11, companies owed money by Bison are expected to tell the court about the dealer's debts. For instance, on Friday, JW Millwork filed a demand to receive $601,910.39 worth of work delivered to Bison in the 45 days prior to Bison's Chapter 11 filing.
Bison has said in filings that it sought Chapter 11 protection in part because of the financial difficulties it incurred while retrenching following a period in the late 1900s and earlier this decade in which it sought to move far beyond its Houston base. At its peak it had operations in markets such as Phoenix, Las Vegas, and Denver, employing a total of 1,350 people. Since then, "the core operations at Bison Materials LLC [serving greater Houston] have continued to be successful, while the non-core operations have been a disaster," Bison president Pat Bierschwale said in one declaration.
For instance, in the fiscal year ended April 30, 2006, the core operations recorded a $10.4 million net profit on $293.4 million in revenue, but the non-core part of Bison posted a $2.7 million net loss on $107.9 million worth of sales. Bison's Houston-area core operations didn't swing to a loss until the fiscal year ended last April 30, when the core businesses recorded a $4.7 million loss on $179.1 million in revenue. But during that same period, the non-core operation's net loss swelled to $11.4 million on just $34.9 million in revenue.
While in Chapter 11, Bison will ask the bankruptcy court to reject a number of real estate and equipment leases, largely related to operations its has closed. Bierschwale said in his statement that Bison has had trouble subleasing properties and getting out of leases because the Las Vegas and Phoenix markets where the properties are located are "some of the most toxic real estate markets in the United States."
Bison also noted in early filings that credit problems contributed to its need to file for Chapter 11. In November 2005, Bierschwale's statement said, Bison entered into an amended credit agreement led by Wachovia Bank that provided a $70 million revolving credit facility and a $4.44 million term loan. But over the years, as the housing recession deepened, Wachovia reduced the limit on that revolving facility to $60 million in July 2007, $50 million in December 2008 and $30 million in March 2009.
In a press release issued June 29, Bison said it has realigned its operations "to focus exclusively on lumber distribution and value added products and services including millwork, engineered wood products, pre-manufactured framing products, windows and installed insulation. Additionally, Bison has expanded its product offerings to include commercial grade doors and hardware and concrete accessories. Bison remains focused on its key customer base that includes high volume production builders, custom builders, multifamily apartment builders, light commercial builders and the associated trades. Geographically, Bison will continue to focus on its core markets that include the greater Houston area and Beaumont."
The company's two-year restructuring effort is virtually complete, COO Tom Tolleson told ProSales in an interview on June 29, adding: "We don't anticipate any further operational adjustments," including making any more cuts in facilities or in Bison's 556-person workforce.