ORCO Construction Supply Inc. of Livermore, Calif., announced Tuesday, April 7, it had reached an agreement to sell its assets to ACSP, an entity controlled by Greg Grosch, cofounder of White Cap Construction Supply. ORCO also filed on Wednesday for protection from creditors under chapter 11 of the federal bankruptcy laws. It will seek a sale under the bankruptcy code's Section 363, which allows for the sale of assets free of liens and other claims.
"The strength of Mr. Grosch's relationships in and knowledge of the construction supply industry were two major factors in the decision making process of ORCO's board of directors to approve the sale to ACSP," ORCO president and CEO Peter Alexander said in a news release. "Despite the required reorganization, ORCO intends to continue to operate its business through the sale date, which is expected to occur at the end of May. Additionally, subject to reaching amenable agreements with its landlords, it is also anticipated that the purchaser will continue to operate in its existing locations."
Orco supplies construction professionals from 12 locations and two rebar facilities in California, Nevada, and Arizona. It ranked 21st on the 2008 ProSales 100, with sales in 2007 of $271.2 million, 87% of them to pros.
Like many other dealers, ORCO has been hard-hit by the housing downturn. In February, it announced it would consoldiate seven branches. At that time, Alexander called those closures "simply the latest in a series of planned and well-executed steps to remain viable in such a depressed market."
Chapter 11 is the most common form of bankruptcy, as it frees a company from the threat of creditors' lawsuits while it reorganizes its finances. Unless a bankruptcy court rules otherwise, the debtor remains in control of the business and its assets.