Color Spot Nurseries Files for Bankruptcy
Color Spot Holdings, the number-one grower on Greenhouse Grower’s 2018 Top 100 Growers report with 21 million square feet of environmentally controlled production, filed for Chapter 11 in a Delaware bankruptcy court Tuesday, according to a report on Law360.com. The report indicates that after years of bad weather and sales losses, the company needed to make a quick all-assets sale to deal with $147 million in debts, including $83 million due this week.
In the declaration, Color Spot CEO Paul Russo said the company has been experiencing declining revenues since 2014 due to water restrictions, severe weather in 2015 and 2017, and losses of certain markets with key customers.
During the past year, the company tried to deal with its financial problems by closing four of its 13 nurseries, laying off 30% of its workforce, and attempting to sell its Texas-based southwestern division.
A quick asset sale, Russo says, was necessary because summer typically brings a decline in sales and operating revenue, and August through September are a capital-intensive period of preparing for the holiday season. In addition, August is the time the company’s customers begin planning their purchases for next spring, he says.
“A sale on the timeline the debtors are proposing will provide the assurances customers will expect when placing their orders with Color Spot in that period,” Russo told Law360.com.