bankruptcy | Jan 13, 2024 |
Kelly-Moore Paints abruptly shutters

California-based paint brand Kelly-Moore abruptly ceased operations on Friday, announcing that it would begin an “orderly, out-of-court wind-down” of its Texas manufacturing facility and its chain of 157 retail locations.

“I’m extremely disappointed and saddened by this outcome,” said CEO Charles Gassenheimer in a statement. “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.”

In the same statement, the company said it would “endeavor to fulfill previously placed customer orders to the extent possible from existing inventory in Kelly-Moore’s Union City, California, distribution facility.” All employees (an October 2022 statement pegged the head count at 1,200) have been laid off.

Founded in San Carlos, California, in 1946 by William Kelly and William Moore, Kelly-Moore grew over the decades to become one of the largest independently owned paint brands in the U.S. Its product was often favored in commercial applications—the company’s website showcases Kelly-Moore paints used on Apple’s corporate campus in Cupertino and Levi’s Stadium in San Francisco.

In 2022, the company was acquired by the Flacks Group, a Florida-based investment firm that describes itself as “specializing in the acquisition and operational turnaround of medium-sized businesses in complex situations where a rapid solution is of paramount importance.” The terms of the deal were not disclosed at the time.

In a statement, Kelly-Moore said that the company had become critically burdened by lawsuits seeking compensation for asbestos-related illness, which stemmed from the company’s use of the material prior to 1981. It referred to more than $600 million in settlements paid out over 20 years, with $170 million more likely on the horizon. The company also said that lingering supply chain issues, exacerbated by the disruption of the pandemic, likely played a role in its challenges.

Last week, Kelly-Moore’s cash flow issues became public when the company shuttered its Texas manufacturing plant and furloughed 700 employees—a move that Gassenheimer said at the time was hopefully temporary—and announced that it was seeking a partner or investor to recapitalize the business. A few days later, the pause became a full stop.

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