66-year-old appliance company files for Chapter 11 bankruptcy
Technological advancement in industries has led to the demise of companies and entire business sectors throughout history.
A classic example of the collapse of an industry caused by technological advancement was the demise of the video retail industry with the proliferation of video streaming services in the mid-2000s.
The popularity of home video systems and VHS tapes in the 1980s led to the proliferation of video rental stores and the launch of Blockbuster Video in 1985 and its biggest rival, Hollywood Video, in 1988.
By the mid-2000s, DVDs overtook the VHS format as video streaming evolved. By 2010, video retail stores faced financial difficulties as streaming became widespread and DVD prices dropped.
Hollywood Video’s parent Movie Gallery filed for Chapter 11 bankruptcy in February 2010 and was converted into Chapter 7 and liquidated two months later.
Blockbuster came close behind Hollywood, filing for Chapter 11 in September 2010 with nearly $1 billion in debt and closing all of its stores in August 2014.
The Movie Gallery goes into Chapter 7 liquidation and closes in April 2010.
Blockbuster Video filed for Chapter 11 bankruptcy in September 2010 and closed in August 2014.
Redbox Video’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 7 bankruptcy and went into liquidation in July 2024.
The final nail in the coffin of the video rental industry was the parent of Redbox Video Chicken Soup for Soul Entertainers Conversion of Chapter 11 case to Chapter 7 liquidation on July 10, 2024.
Another business sector, the refrigeration equipment industry, also faced a technological change that led to the collapse of a large company.
RV refrigerator company Norcold has filed for Chapter 11 bankruptcy liquidation to sell its assets.Shutterstock” loading=”eager” height=”540″ width=”960″ class=”yf-1gfnohs loader”/>
RV refrigerator company Norcold has filed for Chapter 11 bankruptcy liquidation to sell its assets.Shutterstock
old recreational vehicle refrigerator manufacturer Norcold LLC filed for Chapter 11 bankruptcy with a liquidation plan to sell its assets to its debtor financing lender, then liquidate and terminate its business.
Borrower based in Ann Arbor, Michigan submitted his petition The lawsuit, filed Nov. 3 in the U.S. Bankruptcy Court for the District of Delaware, listed assets of $10 million to $50 million and liabilities of $100 million to $500 million.
The debtor’s largest unsecured creditors include Dellware Electrical Appliance Co., which owes more than $1.02 million, ZenCargo Freight, which owes more than $341,000, and Longoal Tech LLC, which owes more than $150,000.
Dellware Electrical Appliance Co. owes more than $1.02 million
ZenCargo Freight owes more than $341,000
Longoal Tech LLC owes more than $150,000
Founded in 1959, Norcold manufactured refrigeration units for recreational vehicles and watercraft that used propane or natural gas to fuel the devices, according to an affidavit filed by Restructuring Officer Richard Wu of Alvarez & Marsal North America LLC.
A product recall for units with a high fire risk in 2010 led the company to switch from manufacturer to distributor. Product liability lawsuits have led to costly settlements, increased insurance premiums and defense costs, impacting operations and causing reputational damage.
Changing consumer behavior and increased competition have also caused sales to decline. In 2018, original equipment manufacturers of RVs switched from gas absorption cooling to direct current compressor technology, further impacting Norcold’s business.
Norcold’s large market share in the gas absorption refrigeration market has led to a significant loss in overall market share. While revenue and market share shrank, financial losses continued to mount due to ongoing product liability litigation, rising insurance costs, recalls, and warranty claims.
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Norcold’s net sales fell 60% between 2022 and 2023, and the company will close its Ohio manufacturing facility in 2022, laying off 500 full-time employees. Production was transferred to non-debtor foreign subsidiaries.
The company currently has no employees and operates as a “buy and sell” distributor, relying on third-party manufacturers and non-debted affiliates for production capabilities.
Before filing for bankruptcy, Norcold retained restructuring advisors to develop a bankruptcy liquidation plan and was considering selling its assets to back-to-back bidder Dave Carter & Associates, which also agreed to provide $13 million in debtor financing.
“Ultimately, Norcold concluded that initiating a sale process under Chapter 11 of the Bankruptcy Code was the most appropriate way to preserve and maximize the value of its assets,” Wu said in his affidavit. he said.
Within the scope of the plan, Dave Carter and Partners DIP will bid the loan debt at auction for the debtor’s assets.
Dave Carter & Associates is a national distributor of OEM components for manufactured housing, mobile homes, modular homes and specialty vehicles.
Related: Popular beer brand files for second Chapter 11 bankruptcy
