Armstrong Flooring files for bankruptcy

Armstrong Flooring has filed for Chapter 11 bankruptcy as it continues to search for a buyer. 

The Lancaster-based flooring designer and manufacturer announced the decision on Monday as it reached a deadline with lenders to either sell or refinance the company to repay outstanding loans. 

Armstrong Flooring noted that it was weighing the option of bankruptcy protection in a report with the United States Securities and Exchange Commission (SEC) last week after receiving a week-long extension to its deadline. 

The company retained Los Angeles-based investment banking firm, Houlihan Lokey Capital, late last year to help with the sale of the company and the consideration of other strategic options, but had failed to finalize a purchase or merger agreement by its May 8 deadline. 

Armstrong Flooring said in a statement on Monday that it will continue to seek a sale of the company during the bankruptcy process. 

“Armstrong Flooring filed for voluntary Chapter 11 protection in order to execute an efficient and value-maximizing sale of the business,” said an Armstrong Flooring spokesperson. “Armstrong Flooring is open for business and remains firmly committed to our customers, vendors and employees as we navigate the path forward.” 

The flooring manufacturer reported a loss of $53 million in 2021, adding to the company’s accumulated deficit of $356.2 million. The company’s stock price was at $.29 at the close of trading on Friday, prior to the announcement of the bankruptcy, a drop from $1.64 on April 29. 

Michel Vermette, president and CEO at Armstrong Flooring, attributed the losses to a number of “macroeconomic trends,” including supply chain challenges, the current inflationary environment, and continued headwinds from the pandemic. 

“With the support of our board of directors, we have determined that using the Chapter 11 process to effectuate a potential sale is the right next step for our company,” said Vermette. “As we have said previously, we firmly believe in the value and potential of Armstrong Flooring—and we are confident that this definitive action puts us in the best possible position to preserve and maximize value for our stakeholders.” 

The credit agreement, if approved by bankruptcy court, would provide for $30 million of debtor-in-possession financing, providing Armstrong Flooring with the liquidity to operate and cover administrative expenses as it pursues a sale. 

The company’s businesses in China and Australia will not be included in the Chapter 11 filing, but are part of the sale process. Armstrong Flooring employs 1680 people with 340 people in China, 110 in Australia and 420 in Lancaster County.