On October 4, 2010, International Garden Products filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. International Garden Products ("IGP") is the parent company of Iseli Nursery ("Iseli") and Weeks Wholesale Rose Grower ("Weeks"). As affiliates of IGP, Iseli and Weeks also filed petitions for relief and are requesting the Court allow the companies to be jointly administered as a single bankruptcy proceeding. See Declaration of James H. Hubert, III in Support of First Day Relief at pp. 7-8 (hereinafter "Hubert Decl. at p. ___"). This post will look briefly at the nature of IGP's business and the reasons it filed petitions for bankruptcy.
Incorporated in 1996, IGP grows and sells horticultural products to independent garden centers and landscapers throughout the United States. Iseli focuses on growing conifers, Japanese Maples, and similar ornamental trees. Weeks, on the other hand, grows and sells high quality roses. IGP's businesses differentiate themselves from other growers by offering "premium quality" roses and trees which are sold to high end garden centers. In doing so, the company focuses less on sales to high volume, national retailers. Instead, IGP tends to sell its products in garden centers that can earn a higher price for for higher quality products. Decl. at pp. 2-3.
Events Leading to Bankruptcy
As a wholesaler for high end trees and roses, IGP's success is tied to the residential housing market. As the housing market has declined over the last couple of years, so too has IGP's revenues. In 2008, Iseli Nursery's sales exceeded $23 million. By 2009, Iseli's sales were down to $17.6 million. Estimates for 2010 place Iseli's sales at $15 million. Likewise, Weeks' sales for 2008 exceeded $14 million, yet by 2009 sales dropped to $11.5 million. Weeks sales are expected to improve somewhat for 2010, rising to $13.3 million. Hubert Decl. at p. 5.
The slump in residential housing was not the only factor that led to IGP's filing for bankruptcy. In 2001 and 2002, IGP guaranteed two leases for one of its subsidiaries, Langeveld. IGP sold Langeveld in 2005, however, Langeveld's landlords would not release IGP from its lease obligations. When Langeveld ceased operations in 2008, IGP enforced the guarantees against IGP, resulting in what the company describes as significant "financial hardship with no related benefit to IGP's value." Hubert Decl. at p. 4-5. IGP's finances were also negatively affected by the Jackson and Perkins bankruptcy. Weeks entered into a growing agreement with Jackson and Perkins for delivery of product in 2010. Although Weeks grew the products under the agreement, Jackson and Perkins failed to take delivery of the roses, leaving Weeks with a $1.7 million loss. Hubert Decl. at p. 4.
IGP's bankruptcy proceeding is before the Honorable Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court. IGP's bankruptcy counsel is Bryan Cave LLP. To review a copy of IGP's petition for bankruptcy, click here. To review the Hubert Declaration (i.e. the Declaration in Support of First Day Motions), click here. A copy of Judge Carey's Chamber Procedures are available for review here.