Filing Alert: BFG Supply Chapter 11

BFG Supply Co., LLC, an Indianapolis, IN-based wholesale distributor of professional horticulture and lawn and garden products, filed for Chapter 11 protecti...

BFG Supply Co., LLC and its debtor affiliates⁽¹⁾, an Indianapolis, IN-based wholesale distributor of professional horticulture and lawn and garden products, filed for Chapter 11 protection on Aug. 18 in the U.S. Bankruptcy Court for the District of Delaware.

The Debtors attribute the filing not to a single event but to more than two years of compounding operational, financial, and liquidity deterioration spanning fiscal years 2024 through 2026. A series of debt-financed acquisitions — Greenhouse Megastore in December 2021, a portion of the wholesale distribution business of Central Garden & Pet Company in July 2023, and the distribution business of V-G Supply Co. approximately one year later — were never fully integrated, leaving duplicative facilities, legacy operating and technology systems, an elevated cost structure relative to a shrinking revenue base, and unrealized synergies that limited the Debtors' capacity to service the indebtedness incurred to fund the transactions. Compounding the cost problem, turnover within the sales organization during fiscal year 2026 drove significant customer attrition as departing representatives took longstanding relationships with them. Consolidated revenue, after rising from approximately $573.7 million in fiscal year 2024 to approximately $581.5 million in fiscal year 2025, fell to approximately $536.5 million in fiscal year 2026 — a decline of roughly $45 million, or nearly 8%, year over year.

Reduced operating cash flow tightened working capital through the borrowing-base mechanics of the Debtors' asset-based revolver: lower sales generated fewer eligible receivables, contracting draw capacity precisely as the Debtors grew more dependent on vendor credit to sustain inventory. Suppliers that had historically extended substantial trade credit reduced lines, shortened terms, and limited availability, setting off a self-reinforcing spiral in which diminished inventory drove lower volumes, further eroded cash flow, and further compressed the borrowing base. The Debtors note that customer demand remained relatively healthy during portions of this period and that the binding constraint was inventory access rather than order generation, with constrained purchasing flexibility, product mix shifts, and pricing pressure compressing gross margins through much of fiscal years 2025 and 2026 against a backdrop of inflationary cost pressure and reduced discretionary consumer spending across the lawn and garden market.

Funded debt at the Petition Date totals at least approximately $342.5 million across two facilities entered into on Nov. 5, 2021: approximately $43.08 million of prepetition revolving loans under a roughly $120 million ABL commitment with ACF Finco I LP as administrative and collateral agent, and not less than approximately $299.46 million of term loans with Ares Capital Corporation as administrative and collateral agent, comprising not less than approximately $137.61 million of Term Loans A and not less than approximately $161.85 million of Term Loans B. Confronting developing liquidity pressure, the parties amended both facilities in November 2025, supplying a new $45 million term loan and a delayed draw facility with $15 million of commitments, extending maturities to Dec. 31, 2028 (ABL) and Dec. 31, 2029 (term loan), exchanging the existing term loans on a cashless basis into the two new classes, and converting term loan interest to a paid-in-kind basis absent an affirmative cash-pay election, subject to an incremental 3.00% per annum PIK premium. The amendments also installed Patrick Bartels as Independent Manager of BFG Supply Investment Holdings, LP, whose affirmative vote is required for specified actions and who, following a Trigger Event that has since occurred under the partnership agreement, holds majority Board authority over matters including strategic restructuring alternatives and an orderly wind-down. The prepetition ABL agent issued a Notice of Event of Default on June 24, 2026 citing purported payment defaults, and on Aug. 12, 2026 issued a Notice of Implementation of Default Rate applying default-rate interest retroactively.

Liquidity forecasts indicated that, absent a significant capital infusion, excess availability would approach the revolver's cash dominion thresholds before the Debtors would need to fund the inventory build for the following spring selling season, and the prepetition revolving lenders advised they would extend additional financing only through a DIP facility. Having failed to secure a consensual refinancing or out-of-court alternative, the Debtors retained SSG Advisors, LLC on Aug. 6, 2026 and now enter chapter 11 to pursue three concurrent rather than sequential workstreams: an expedited going-concern marketing process run by SSG for some or all of the businesses and assets, targeted for completion in approximately 60 days with a bidding procedures motion to be filed early in the cases and with active negotiations underway with parties that may serve as stalking horse bidder for certain assets; an orderly liquidation program conducted by SB360 Capital Partners, LLC and Tiger Capital Group, LLC through a joint venture as Liquidation Consultant covering inventory, receivables, machinery, equipment, and fixtures, under a Consulting Agreement the Debtors seek to assume and that may be terminated to facilitate a going-concern sale of substantially all assets; and a real estate monetization led by A&G Realty Partners, LLC across the three owned facilities and 16 leased warehouse, distribution, and showroom locations.

To fund the cases and the seasonal working-capital requirement, the Debtors are seeking approval of a proposed postpetition superpriority senior secured asset-based revolving DIP facility of up to $55 million from their prepetition revolving lenders, consisting of new money revolving commitments plus a cashless roll-up and refinancing of all outstanding prepetition revolving loans held by the DIP lenders, together with cash payment of accrued interest, fees, and other amounts owing to those lenders as of the Petition Date. The Debtors state that no party they contacted was willing to provide postpetition financing on an unsecured, junior lien, or priming basis, that no party other than the prepetition revolving lenders was willing to lend at all, and that the facility was negotiated at arm's length. Separately, Canadian Debtor De Cloet Greenhouse Mfg. Ltd. is expected to commence ancillary proceedings under Part IV of the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) seeking recognition of the chapter 11 cases as a foreign main proceeding, with the Debtors seeking authority for De Cloet to serve as foreign representative.

The company reports $100 million to $500 million in both assets and liabilities. The filing indicates that no funds will be available for distribution to unsecured creditors after administrative expenses are paid. The case number is 26-11284.

⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.

Chapter 11 Debtors

Affiliated Debtors Chart
Source: Bondoro, Court filings

Top Unsecured Claims

Form 204 Top Unsecured Claims
Source: Bondoro, Court filings

Key Parties

Counsel:

Financial Advisor / CRO:

Real Estate Consultant:

Investment Banker:

Liquidation Consultant:

Canadian Bankruptcy Counsel:

Proposed Canadian Court Appointed Information Officer:

Counsel to the Information Officer:

Claims Agent:

Equity Security Holders: