Kelly-Moore Paints has announced its decision to cease operations and initiate an orderly, out-of-court wind-down of most of its business. The company will make efforts to fulfill existing customer orders from its Union City, California, distribution facility while permanently closing all other facilities, including the manufacturing facility in Hurst, Texas, and leased retail stores.
In response to financial challenges, the company had recently furloughed around 700 employees and temporarily halted operations at its manufacturing facility. Despite seeking new capital and assistance from financial advisor Houlihan Lokey, Kelly-Moore couldn't secure the funding required for continued operations. None of the potential investors provided a Letter of Intent, leading to the difficult decision to cease operations.
CEO Charles Gassenheimer expressed disappointment over the outcome, citing legal and financial burdens that have plagued the company for many years. The company faced substantial asbestos litigation claims dating back over 30 years, contributing to significant financial constraints. Recent ownership also inherited legal liabilities from their 2022 acquisition, including unpaid sales and use taxes.
Despite efforts to address challenges, including relocating the headquarters, exploring supply-chain partnerships, and resolving asbestos claims, the company couldn't attract additional funding or interest due to the asbestos litigation burden. With no viable options for bankruptcy reorganization or in-court liquidation, Kelly-Moore leaders have announced the need to cease operations. Employees will be compensated for regular time worked, and efforts will be made to collect receivables for accrued benefits.
