BFG Supply: 461 full-time employees affected

BFG Supply has set a compressed timeline for the sale of its assets. The company filed for Chapter 11 on August 18, and filed its bidding procedures motion the following day. Under the proposed schedule, bids are due by October 2, 45 days after the filing, with a sale hearing scheduled for October 14. The sale must be completed by October 22. The company says its limited liquidity leaves little room to extend the process.

The team with Bondoro.com dove into the numbers and provided a full write-up. From those, it can be concluded that sales force turnover drove customer attrition, and suppliers tightened trade credit, pursuing a going-concern sale alongside an already-underway inventory liquidation, funded by a DIP facility of up to $55M

The Delaware filing covers BFG Supply Co., LLC and sixteen affiliates, listing $100 million to $500 million in both assets and liabilities. Revenue held at approximately $573.7 million in fiscal 2024 and $581.5 million in fiscal 2025 before falling roughly 8% to approximately $536.5 million in fiscal 2026. The company attributes the drop to customer attrition following turnover in its sales organization: departing representatives took client relationships with them, and their replacements needed time to rebuild the business those relationships generated.

Headcount peaked at approximately 700 across distribution, manufacturing, logistics, sales and administrative roles and stood at approximately 461 full-time employees at filing, plus roughly seven independent contractors.

Falling revenue cut into the asset-based revolver in a direct way. Borrowing availability is tied to a base of eligible receivables and eligible inventory, so fewer sales meant fewer receivables, a smaller maximum draw and less cash for payroll and vendor obligations. Suppliers, who had extended substantial trade credit to finance inventory purchases, responded to the deteriorating liquidity by reducing credit, shortening payment terms or limiting availability. Thinner inventory then drove lower sales volumes, which cut cash flow further and prompted additional suppliers to tighten credit, contracting the borrowing base alongside the shrinking inventory.

Gross margins compressed through much of fiscal 2025 and 2026 under this cycle, and the company describes it as increasingly difficult to reverse outside a restructuring. Acquisitions completed between 2021 and 2024, including Central Garden & Pet’s independent garden center distribution business and VG Supply, added separate facilities, customer bases and technology systems that were never fully integrated, keeping duplicative costs on the books through the decline.

Three sale processes are running at once. SSG Advisors is marketing the business on a going-concern basis, A&G Realty Partners is marketing the three owned properties and the interests in sixteen leases, and a joint venture of SB360 Capital Partners and Tiger Capital Group began liquidating inventory, receivables and equipment the first week of August, ahead of the filing.

A $55 million superpriority DIP facility from ACF FinCo I LP, the prepetition ABL agent, funds operations during the case, with up to $22 million permitted outstanding before a final order is entered. The facility works as what the interim order calls a creeping roll-up: cash collateral pays down the prepetition revolving loans, which frees up equivalent room under the DIP facility, which the company draws to keep running. The four-week interim budget projects $7.985 million of receipts paying the revolver down from $43.080 million to $35.095 million while the DIP balance climbs to $16.024 million.

The bidding procedures, filed the day after the petition, require a cash deposit of 10% of the purchase price, an executed asset purchase agreement with no financing contingencies, and a commitment to close by October 22. The DIP agent and prepetition agents can credit bid across their claims without a deposit or the other qualifying conditions. Where the company designates a stalking horse, competing bids must clear that value plus bid protections plus a minimum overbid, neither of which is set yet. Absent a stalking horse, the company can set its own minimum bid and notify prospective bidders by October 5.

The case calendar puts the bidding procedures order on September 17, the final DIP order on September 22, a stalking horse designation deadline on September 28, the bid deadline on October 2, the auction on October 6 and the sale hearing on October 14. Sale consummation and the DIP facility maturity milestone both fall on October 22. The DIP facility itself matures no later than February 14, 2027, or earlier if a plan is confirmed or a sale of substantially all working capital assets closes first.

The liquidation and the going-concern sale are designed to run together rather than compete. The company states the liquidation was structured to operate in tandem with the marketing process, and the bidding procedures motion ties the two directly: early indications of interest in a going-concern sale will tell the company whether to continue or halt the liquidation. Creditors have until November 3, 75 days from entry of the interim order, to challenge the company’s stipulations on the validity of the prepetition liens or the mechanics of the roll-up, with a committee’s investigation into those questions capped at $50,000.

De Cloet Greenhouse Mfg. Ltd., the Ontario entity that came into the group through the 2021 acquisition of De Cloet Greenhouse Manufacturing, is expected to seek recognition of the Chapter 11 case as a foreign main proceeding before the Ontario Superior Court of Justice, with a deadline of October 21 for that recognition order if the company determines it is necessary. Currently, the company continues business, and multiple market parties have shown interest in continuing with the company.

Read the complete case summary at Bondoro.com