When Gardener’s Supply filed for Chapter 11 bankruptcy in late June, it owed its vendor Green Mountain Mulch over $81,000. Over a month later, Daniel St. Onge, the owner of the mulch dealer, said he nor most of Gardener’s vendors are likely to fully recoup what they’re owed.
“It ain’t looking good. I think it’s gonna be cents on the dollar, if anything,” St. Onge said. “It’s definitely a hurt and that’s for sure. … It was quite a shock actually. I do a lot of business with them and didn’t really know nothing until the day of.”
As of July 31, the popular employee-owned Vermont gardening business was acquired by Indiana-based competitor, Gardens Alive!. And in the wake of the sale, along with hundreds of thousands of dollars that Gardener’s still owes its international, national and local vendors, it’s the company’s employees now bracing for layoffs and suppliers calculating their losses.
St. Onge said Gardens Alive! has begun the process of restarting business with Gardener’s former vendors. But according to court documents, Gardens Alive! will not be liable for any debt, legal claims or liens against Gardener’s related to its bankruptcy.
“I’m in the process of speaking on that with them,” St. Onge said on Monday. “Had a little email chatter today about it and they’re supposed to talk to me tomorrow.”
Alongside vendors, workers at Gardener’s Supply are also facing upcoming layoffs following the sale, as first reported by Courtney Lamdin of Seven Days.
The Vermont Department of Labor confirmed the layoffs, which will primarily hit Gardener’s Milton warehouse location and call center. Vermont Department of Labor spokesperson Rachel Dumeny told VTDigger that the department could not yet specify how many workers are set to be laid off, citing pending legal approval of the company’s layoff notice.
Dumeny wrote in an email that the department will be providing a free information session for laid off workers on Wednesday at Gardener’s Milton warehouse to discuss unemployment benefits, health insurance and re-employment opportunities.
Gardener’s employee stock ownership plan also doesn’t appear to be in good standing after it lost its independent trustee — the Washington-based ESOP Trust Company.
Court documents show that the trust company, once meant to “navigate the ESOP through the pending bankruptcy and corresponding asset sale,” has resigned, citing “persistent post-petition breaches” of its agreement with Gardener’s.
The breaches include failures by Gardener’s to pay legal fees and comply with various fiduciary and reporting obligations, according to court filings.
Gardener’s bankruptcy counsel said it would not pay the trust company $100,000 it had previously agreed to pay to steward the ESOP during the bankruptcy process.
Unless Gardener’s has enough money left over after the sale, workers in the ESOP plan may not see a dime, according to Matt Cropp, executive director of the Vermont Employee Ownership Center.
“So in a situation like this, the company’s got a bunch of outstanding debts and obligations — payroll, the trade invoices, secured debt, unsecured debt, all of those things, right? Then equity is usually at the bottom of the stack,” he said. “So the question for this sort of thing would be is there a residual amount and, if so, then there’s some fraction of it that would be distributed pro rata amongst folks depending on their shares.”
Gardener’s Supply declined to comment.
