Namco files for Chapter 11 bankruptcy protection
Casual Living Staff -- Casual Living, 3/28/2013 5:36:41 PM
MANCHESTER, Conn. - Namco LLC, a pool and patio supply company, has filed for Chapter 11 bankruptcy protection status in U.S. Bankruptcy Court. Chapter 11 status permits a financially struggling company to continue its daily business while seeking a way to return to profitability or failing that, to liquidate.
The 50-year-old company operates 37 stores from New Hampshire to Maryland and has its 230,000-sq.-ft. distribution center and corporate offices. One of Casual Living's Powerhouse Specialists for many years, Namco has 288 employees, 134 salaried and 154 hourly, according to court documents filed Sunday.
In the court documents and a Journal Inquirer newspaper report, Chief Restructuring Officer Lee Diercks attributed the need for Chapter 11 status to the ongoing economic downturn, unsuccessful efforts to implement a new business plan and sales dampened by cooler than normal periods of weather during traditional peak spring and summer selling periods.
Diercks said that in 2006 Namco changed its business structure, hiring numerous, higher-level executives and replacing 20 store managers with "a new layer of highly compensated middle managers who were deemed to have stronger operational skills." Those managers instituted a new sales system that proved to be unsuccessful in 2007, Diercks said, resulting in increased operating expenses and "significant business disruptions."
During 2008, Namco restored its previous structure, he said, but by then the recession kicked in and sales declined. In fiscal 2012, Namco saw sales drop 10% to $82.8 million from $92.2 million in 2011. That trend grew worse in the first two months of 2013, when sales were off 48% in January and 42%.
Namco has outstanding debt of more than $70 million, the filing said. The company asked the court to approve debtor financing that would allow it to continue to pay its workers as well as its suppliers and remain in business while it works through the bankruptcy process.
The company was founded in 1962 by the Radocchia family. In 2003 it was sold to Tennessee-based Whitney Equity Holdings Corp., which subsequently reorganized Namco as a Delaware limited liability company, the filing said.
Whitney Equity now owns about 50% of Namco and GarMark Partners, a Stamford investment group, owns the other 50%, according to the filing.
Namco's 2003 sale to Whitney Equity Holdings followed a major explosion and fire at its Manchester headquarters in 2001. No one was injured in the fire, but it prompted the evacuation of nearby residents and brought a variety of local, state, and federal emergency and environmental agencies to investigate.
Fire and building officials determined that Namco violated multiple safety regulations, including storing too much of the hazardous chemical calcium hypochlorite and allowing repackaged outdated chemicals to be stored there as well.
The town allowed Namco to rebuild the destroyed section of the warehouse and expand it with the company's agreement to ship all pool chemicals directly from suppliers to retail operations, rather than storing them at the Sanrico Drive warehouse. But the court filing describes the Manchester site as a "chemical repackaging facility."
Former CEO Stephen Radocchia left the company in 2006, a year after Namco's $35 million acquisition of New Jersey pool retailer Branch Brook Co., the filing said.
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