Handy Hardware in bankruptcy to address operations, Capital One debt

By Caroline Salls

Pittsburgh, Jan. 11 - Handy Hardware Wholesale, Inc. filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the District of Delaware.

In a statement filed Friday with the court, president Thomas J. Schifanella Jr. said the company will use the Chapter 11 process to right-size its operations and restructure its debt to Capital One.

Schifanella said Handy Hardware decided to shut down operations at its Meridian, Miss., warehouse facility after economic issues left it unable to reach the necessary growth rate to sustain operations there.

A resulting cash drain and the company's inability to service the Capital One debt led to the decision to close the Meridian facility and migrate the customer service and inventory services performed there to its Houston warehouse facility, the statement said.

Through its efforts to improve efficiency and reduce operational costs, Schifanella said Handy Hardware projects that it will achieve break-even operations by April 1.

In connection with the bankruptcy filing, Handy Hardware has obtained a commitment for $30 million in debtor-in-possession financing from Wells Fargo Bank, NA.

Interest will be Libor plus 700 basis points.

The loan will mature on the earliest of 180 days from the bankruptcy filing date, the effective date of a plan of reorganization, 35 days after entry of an interim order if a final hearing has not been held, 24 hours after the final hearing if a final order has not been entered and occurrence of an event of default.

The financing agreement requires the company to file its plan and related disclosure statement within 60 days of the bankruptcy filing, to obtain confirmation within 175 days and to have the plan take effect within 180 days.

The company is seeking interim access to $25.1 million of the DIP financing. The interim hearing is scheduled for Jan. 14.

According to court documents, Handy Hardware has $50 million to $100 million in both assets and debt.

The company's largest unsecured creditor is American Water Heater Co. of Johnson City, Tenn., with a $1.4 million trade claim. No other unsecured creditors were listed with claims of $1 million or more.

The company is represented by Ashby & Geddes, PA.

Handy Hardware is a hardware retailer co-operative based in Houston. Its Chapter 11 case number is 13-10060.

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