Rolling Greens Nursery - Chapter 11 Case Summary

Business Description

Headquartered in Commerce, CA, Rolling Greens Nursery, Inc. (the "Debtor") is a 40-year-old Los Angeles institution operating as a high-end garden center and lifestyle shop with a devoted following among plant lovers, designers, and home decorators.

• The Debtor operates as a premier nursery and garden lifestyle destination with retail store locations in Culver City and the Beverly Grove/Fairfax District area of Los Angeles.
• In addition to its retail operations, the Debtor provides commercial and residential plant maintenance, landscape design, and commercial holiday and display services.
• The Debtor also provides event services at its location in the Downtown Los Angeles ("DTLA") Arts District.

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Corporate History

Rolling Greens was established in June 1986 when co-founders Laurie Resnick and Greg Salmeri merged their respective interior plantscape companies. Ms. Resnick and Mr. Salmeri each hold 50% of the Debtor's shares and have served as co-Chief Executive Officers since the Debtor's incorporation.

First Twenty Years as a Commercial Services Provider

• For the first two decades following its founding, the combined business operated exclusively as a commercial services company with three core divisions: commercial interior plantscape, commercial landscape design, and commercial holiday decor.
• These divisions developed long-tenured relationships with institutional clients across Los Angeles and remain the profitable core of the business today.

Retail Expansion and Evolution

• Culver City Acquisition (2001): Mr. Salmeri and Ms. Resnick acquired the original Rolling Greens retail store, located at 9528 Jefferson Blvd., Culver City, California (the "Culver City Store"), which at the time sold primarily plantscape products and operated as a natural extension of the commercial services business.
  • The Culver City Store has operated continuously under Rolling Greens' ownership for 25 years and serves as the Debtor's original flagship location.
• Beverly Grove Store (2009): Rolling Greens opened a second retail location at 7505 Beverly Boulevard, Los Angeles, California (the "Beverly Grove Store"), expanding its product assortment to include home and lifestyle goods in addition to plants.
  • For more than a decade, the two-store retail footprint remained stable, with the Debtor continuing to derive the majority of its profit from its commercial services lines.
• Mateo Venue (2016): Rolling Greens opened a location at 1005 Mateo St. and 1918 Bay St., Los Angeles, California (the "Mateo Venue"), in the DTLA Arts District. Originally conceived as a retail concept, the Debtor converted the premises into an event venue after the retail model did not perform, and it continues to operate as such today.

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Operations Overview

For most of the Debtor's history, Rolling Greens operated profitably as a commercial services provider with a small retail footprint. As of the Petition Date, inclusive of its Corporate Headquarters, the Debtor operates from four locations in the Los Angeles area, employing approximately 75 employees.

2022 Expansion

Coming out of the COVID pandemic, retail performance was strong and the Debtor made the strategic decision to expand. In 2022, the Debtor entered into three new commercial leases for the following locations:

• Corporate Headquarters: 5340 Harbor St., Commerce, CA 90040, which serves as the Debtor's current corporate headquarters and warehouse facility.
• Sportsmen's Lodge Store: 12833 Ventura Blvd., #145, Studio City, California, which opened in the newly redeveloped Shops at Sportsmen's Lodge complex and offered a combined retail and restaurant/wine bar concept (Cosette).
• Santa Monica Store: 2537 Lincoln Boulevard, Santa Monica, California, offering a retail nursery concept, which did not open until July 2024.

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Prepetition Obligations

As of the Petition Date, the Debtor's cash in its bank accounts totaled approximately $2,600. Just prior to the Petition Date, the Debtor held approximately $500,000 in receivables, an estimated $2,429,000 in inventory (a cost-basis value as of date of purchase, which would be worth substantially less in a liquidation), and an estimated $60,000 in equipment and furnishings. The Debtor's principal liability picture as of the Petition Date is summarized below:

Secured Debt

• SBA Loan: Approximately $97,600 is owed to the U.S. Small Business Administration ("SBA"), which provided the Debtor a loan in the principal amount of $150,000 pursuant to a Loan Authorization and Agreement dated July 21, 2020.
  • The SBA purports to hold a security interest in all assets of the Debtor pursuant to a Security Agreement dated July 21, 2020, and recorded a UCC financing statement with the California Secretary of State's Office on August 1, 2020.
• Leaf Capital Funding: Approximately $10,751.16 in secured debt.
• Cell Business Equipment: Approximately $70,672.78 in secured debt.
• Truck Lessors: Approximately $283,000 secured against the Debtor's trucks.

Unsecured Priority Claims

• CDTFA: Approximately $264,000 in unsecured priority claims.
• LA City Tax Assessor: Approximately $58,951.82 (priority status uncertain).

Other Unsecured Claims

• Prepetition Payroll: Approximately $172,000 in unsecured priority claims.

General Unsecured Debt

• Approximately $16 million in general unsecured debt.
  • Approximately $12 million of this amount relates to prepetition advances made to the Debtor by Mr. Salmeri and Ms. Resnick.
  • At least another $2 million of the Debtor's general unsecured debt is contingent and unliquidated (and, in certain instances, disputed).

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Events Leading to Bankruptcy

2022 Retail Expansion as the Primary Driver of Distress

Beginning in 2022, the Debtor expanded into three new locations (Studio City, Santa Monica, and its Commerce corporate office), taking on lease obligations all priced at peak COVID-era rental rates. By the time those locations opened, consumer retail had shifted materially away from brick-and-mortar, and all three obligations became structural drags on an otherwise viable business. None of these locations were profitable, and the 2022-2023 retail expansion is the primary cause of the Debtor's present financial distress.

• The Debtor's financial difficulties stem from several compounding factors: the liabilities taken on during its 2022 expansion, a sustained decline in foot traffic to brick-and-mortar retailers, reduced consumer spending on home goods, and the economic impact of the January 2025 Palisades and Eaton wildfires on Los Angeles-area businesses.
• Together, these factors not only derailed the Debtor's expansion plans, but left it unable to meet its debt obligations in the ordinary course of business.

Operational Restructuring Initiatives

Recognizing the losses resulting from its 2022 expansion and the need to improve operations, the Debtor began efforts to reorganize operationally in May 2024 and has since continued to closely evaluate its performance to streamline its business. Major cost-cutting initiatives undertaken by the Debtor include:

• Store Closures: The Debtor ceased operations at the Santa Monica Store in April 2025, less than one year after it opened, and exited the Sportsmen's Lodge Store in April 2026. Together, these closures reduced the Debtor's annual rent expense by approximately $1 million.
• Lease Restructuring: The Debtor has worked to restructure its remaining commercial leases, resulting in, or expected to result in, approximately $840,000 in reduced rental expenses.
  • Shortly before the Petition Date, the Debtor renegotiated and amended its lease with the landlord of the Corporate Headquarters, substantially reducing its ongoing occupancy costs.
• Headcount Reductions: The Debtor reduced its personnel and related expenses, generating annual savings of approximately $1 million.
• Systems Upgrades: The Debtor is implementing a new point-of-sale and customer relationship management system, as well as a new inventory management platform, each intended to reduce costs and improve efficiency.

Pivot to Subchapter V Chapter 11

The Debtor's original business lines (commercial interior plant maintenance, commercial landscape design, commercial holiday and display) and its event business remain profitable and collectively represent a viable continuing enterprise. The strategic objective of this Subchapter V, Chapter 11 reorganization is to preserve what is profitable and shed the post-2022 retail expansion obligations that are not. As of the Petition Date, the Debtor remains a viable, respected business with a loyal customer base, strong brand recognition, and experienced employees, and is capable of operating at a profit assuming it is relieved of its current unsecured indebtedness.

• To fund the Case, Mr. Salmeri has agreed to advance to the Debtor up to $350,000 in cash through a post-petition credit facility (the "DIP Facility").
  • The DIP Facility is interest free, allows for one year's deferred payment of principal, imposes no fees or charges, and will be junior to any prepetition liens and security interests that are valid, binding and enforceable.
• The Debtor commenced its Subchapter V Chapter 11 case in the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division.