Armstrong Files Chapter 11, Will Fund Operations with $30M DIP Loan
Lancaster, PA, May 9, 2022-Armstrong Flooring announced that the company and certain of its subsidiaries have filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
In a continuation of its ongoing sale process, the company intends to continue pursuing an efficient and value-maximizing sale of its business through a competitive Chapter 11 sale process. The Company’s businesses in China and Australia will not be included in the Chapter 11 filing, but they are part of the sale process.
In December 2021, Armstrong Flooring retained Houlihan Lokey Capital to assist with a process for the sale of the company along with the consideration of other strategic alternatives. The sale process is continuing, and Armstrong Flooring hopes to consummate an orderly sale of the entire business or its core assets as soon as practicable.
“Our business and team members have been working diligently to strengthen our financial foundation in the face of several macroeconomic trends-including supply chain challenges, the current inflationary environment and continued headwinds from the Covid-19 pandemic,” said Michel Vermette, president and chief executive officer. “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. 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. In the meantime, we are open for business and remain firmly committed to our customers, vendors and employees as we navigate the path forward.”
In order to fund and preserve its operations during the Chapter 11 process, the company has entered into a credit agreement, subject to Bankruptcy Court approval, providing for $30 million of debtor-in-possession (“DIP”) financing. Upon approval by the Bankruptcy Court, the DIP financing will provide Armstrong Flooring with the necessary liquidity to operate and cover administrative expenses as it pursues a value-maximizing sale.
The company will file certain motions with the Bankruptcy Court requesting customary relief that will enable Armstrong Flooring to transition into Chapter 11 with as little disruption to its ordinary-course operations as possible, including support for payment of employee wages and certain benefit programs. The company expects these motions to be approved within the first few days of the case.
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