Orchard Supply bankruptcy: What’s next?
Orchard Supply Hardware filed Chapter 11 bankruptcy. Lowe’s will pick up the majority of the retailer’s stores.
- Nathan Donato-Weinstein
- Real Estate Reporter- Silicon Valley Business Journal
Click here for more on the impact of the Orchard reorganization and what’s behind it.
UPDATE: Orchard Supply Hardware’s San Jose headquarters will largely be spared layoffs related to the company’s acquisition by Lowe’s, a spokeswoman said.
San Jose-based Orchard filed for Chapter 11 bankruptcy protection on Monday, and Lowe’s is stepping in to buy most of the company’s assets — including 60 of roughly 90 California stores — for about $205 million in cash, according to company statements issued this morning.
In a statement, Orchard said the stores would operate as normal during the restructuring and had secured $177 million in debtor-in-possession financing from Wells Fargo to continue meeting financial obligations. Orchard said it would operate as a separate standalone company within the Lowe’s umbrella after the sale is completed.
That “business as usual” status includes the headquarters on Via Del Oro in San Jose, where it occupies 75,000 square feet and has hundreds of workers.
As of Feb. 2, 2013, Orchard counted 5,360 employees, with 533 at Orchard’s San Jose corporate offices, its Tracy distribution center, or part of field operations.
In court records, Orchard said it expected “continued employment for the vast majority of the Company’s employees.”
Spokeswoman Leigh Parrish said there was no list available of which stores Lowe’s was buying. But she said current construction projects and remodels would continue as planned. Orchard also said in court filings it expected most creditors to be paid.
Commercial real estate brokers told me today they expected Lowe’s to retain most if not all of Orchard’s San Jose-area stores given the region’s strong housing market and high barriers to entry.
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