Gardener's Supply: ESOP Collapse Ends 38-Year Employee Ownership Legacy

America's Gardening Resource, Inc., the Burlington, Vermont-based parent company of employee-owned retailer Gardener's Supply Company, filed for chapter 11 bankruptcy protection on June 20, 2025, in the U.S. Bankruptcy Court for the District of Delaware after ESOP buyback obligations, a 35% revenue decline from pandemic highs, technology implementation failures, and a lender default. Founded in 1983 by Will Raap and made 100% employee-owned in 2009, the company that once generated $110 million in annual revenue reported sales of $71.5 million by 2024 after pandemic-era demand subsided. Gardens Alive, Inc.—founded in 1984 and an acquirer of distressed garden brands—purchased Gardener's Supply for $9 million as the only bidder to submit an asset purchase agreement after a marketing process that contacted 1,115 potential buyers. The sale preserved five of six retail locations and the SERAC manufacturing facility but ended 38 years of employee ownership, with ESOP holders receiving no distribution under the liquidating plan.

Company Background

Founding and Employee Ownership.

Gardener's Supply Company was founded in 1983 in Burlington, Vermont, by Will Raap and Alan Newman to sell organic gardening tools and supplies. Raap, an organic gardener from Fremont, California, launched the company as a catalog mail-order business and in 1985 moved operations to five acres at the entrance to the Intervale, a 400-acre sustainable agriculture preserve he helped establish.

Only four years after founding, Raap steered the company toward employee ownership through early adoption of an Employee Stock Ownership Plan (ESOP) in 1987—driven by what his obituary described as his deep respect for the contribution of every employee. In December 2009, Raap sold the remaining ownership stake, making the company 100% employee-owned. At its peak, Gardener's Supply reported more than $100 million in annual sales and 300 year-round employees.

Key historical milestones:

• 1983: Gardener's Supply founded in Burlington, VT
• 1987: ESOP adopted
• December 2009: Company becomes 100% employee-owned
• December 12, 2022: Founder Will Raap dies at age 73

Business Operations.

At filing, the company operated as a multi-channel marketer of gardening products and equipment, including live goods, serving gardeners throughout the United States. Operations included:

• Six retail garden centers across Vermont, New Hampshire, and Massachusetts
• E-commerce distribution from Milton, Vermont warehouse
• Customer service call center in Burlington
• SERAC manufacturing facility in Georgia, Vermont
• 126 full-time and 281 part-time employees

The business is highly cyclical, with peak seasons between March-June (garden season) and November-December (holiday season).

Debtor Entities

The jointly administered chapter 11 cases encompass five related entities:

Path to Chapter 11

Pandemic-Era Demand and Post-Pandemic Decline.

During the COVID-19 pandemic (2020-2022), sales increased as homebound consumers turned to gardening, with revenues reaching $110.3 million in 2021 and $105.4 million in 2022. Stock values for ESOP participants "skyrocketed" during this period. Revenues later declined to $89.6 million in 2023 and $71.5 million in 2024—a 35% decline from the 2021 peak.

ESOP Liquidity Strain.

The pandemic-era stock appreciation contributed to liquidity issues. Longtime employees retired and cashed out their employee stock when values hit record highs, causing what court filings described as "significant liquidity issues." Many workers at Gardener's Supply viewed the ESOP as a de facto retirement account, and when several senior leaders left at the same time, the company became liable for potentially millions of dollars in simultaneous payouts. The cost of funding these ESOP buybacks, combined with higher-than-typical annual compliance and valuation costs associated with ESOP ownership, increased cash obligations.

More than half of Vermont businesses are owned by baby boomers, and as Matthew Cropp, executive director of the Vermont Employee Ownership Center, noted, ESOP viability depends on how companies structure retirement contributions from new employees balanced against payouts—a cycle that can be disrupted when multiple long-tenured employees exit simultaneously.

Technology Implementation Failures.

Two technology investments added operational issues:

ERP System ($500,000). A new Enterprise Resource Planning system led to customer fulfillment issues that management estimated depressed revenue by $5 to $10 million.

Warehouse Management System. A new WMS caused delays during peak season, with over 60% of customer orders in May 2024 delayed by 15-30 days, affecting customer retention.

Bank of America Default.

The company fell out of compliance with its Bank of America line of credit in Q3 2023. Despite forbearance negotiations, Bank of America determined that cash generated during the pandemic surge was primarily paid out as equity to shareholders rather than retained for operations. In October 2024, Bank of America placed a lien on the Burlington headquarters and subsequently terminated the company's access to its credit line; the company filed chapter 11 on June 20, 2025.

Prepetition Stabilization Attempts.

Before filing, the company launched several strategic actions to stabilize operations:

• Significant staffing reductions
• Engaged new external marketing firm
• Renegotiated shipping contracts to reduce costs
• Cut unprofitable product lines (SKU rationalization)
• Initiated process to explore bringing in new capital

The company engaged Tower Partners, LLC as investment banker on December 17, 2024.

Capital Structure at Filing

363 Sale Process

Prepetition Marketing.

Tower Partners conducted a prepetition marketing process:

• Contacted 1,115 potential buyers
• 51 NDAs executed
• 8 indications of interest received
• 3 letters of intent submitted
• 1 asset purchase agreement received (Gardens Alive, Inc.)

The process resulted in one asset purchase agreement.

Stalking Horse Terms.

The stalking horse offer set the floor for other potential buyers to make higher offers.

Auction Outcome and Closing.

No topping bids were received by the July 15 deadline. Gardens Alive, Inc. was designated the Successful Bidder and the sale closed on August 7-8, 2025.

The Buyer: Gardens Alive, Inc.

Gardens Alive, Inc. is a privately held multi-title catalog and e-commerce company founded in 1984 by Niles Kinerk in Lawrenceburg, Indiana. The company specializes in organic gardening products and has grown through acquisitions. In 2001, Gardens Alive acquired several brands from the bankrupt direct marketer Foster & Gallagher for $10.75 million, including Breck's, Gurney's Seed and Nursery Co., Henry Field's Seed and Nursery Co., Michigan Bulb Company, Spring Hill Nursery, and Stark Bros. Additional acquisitions have included the gift brands Bits and Pieces and Spilsbury.

As of 2010, Gardens Alive reported approximately $170 million in annual sales with 400-450 year-round employees and close to 1,000 at peak seasonal demand. The company operates a 600,000 square-foot fulfillment center in Fairfield, Ohio, equipped with warehouse management systems. ### Post-Acquisition Structure

Gardens Alive, led by CEO Felix Cooper, implemented operational changes following the acquisition:

Retained:

• Five of six retail garden centers (Williston flagship, Burlington Intervale, NH and MA locations)
• SERAC manufacturing facility in Georgia, VT (Vermont-made products continue)
• Gardener's Supply brand name on stores and products

Closed/Consolidated:

• Shelburne, VT seasonal store closed (associates relocated)
• Burlington customer service call center permanently closed
• Milton distribution warehouse permanently closed
• E-commerce distribution consolidated to Gardens Alive fulfillment center in Fairfield, Ohio

Workforce Impact. The Vermont Department of Labor confirmed approximately 60 layoffs following the acquisition, primarily affecting workers at the Milton distribution warehouse and Burlington call center. State officials were on-site offering displaced workers assistance with job placement and training programs. Retail store associates at the five remaining locations were retained under Gardens Alive ownership.

Cash Collateral and Adequate Protection

The Debtors used Bank of America's cash collateral under court-approved terms:

Plan of Liquidation

On November 3, 2025, the Debtors filed a Combined Disclosure Statement and Chapter 11 Plan of Liquidation, which was amended on December 4, 2025. The plan provides for the wind-down of the Debtors' estates following the completed sale to Gardens Alive, with distributions to creditors from remaining assets and any proceeds recovered from Causes of Action including preference claims.

Classification and Treatment.

General unsecured creditors in Class 3—the only impaired, voting class—will be paid from whatever funds remain after payment of secured claims, administrative expenses, and priority claims. The $4.5 million owed to the top 30 unsecured creditors (and approximately $9.4 million in total prepetition unsecured debt) is part of that pool. The Debtors are pursuing preference recovery actions and other Causes of Action that may augment the distribution pool, but no specific recovery percentage has been projected.

Richard Simpson filed an objection to the Disclosure Statement on November 24, 2025. The Disclosure Statement was approved on an interim basis on December 3, 2025, with the Combined Hearing scheduled for January 21, 2026.

Key Plan Dates.

ESOP Dispute and Termination

The company's employee ownership structure became a contested matter in the bankruptcy. The ESOP Trust Company filed a Motion to Compel immediate assumption or rejection of the ESOP agreement, which was granted on September 25, 2025. The Debtors subsequently filed a Motion to Reject the ESOP Trust Agreement.

The ESOP Trust Company resigned as independent trustee citing "persistent post-petition breaches," including failures to pay legal fees and comply with fiduciary and reporting obligations. ESOP holders (Class 4) will receive no distribution under the Plan.

The ESOP ended, and the Vermont Employee Ownership Center called Gardener's Supply "a champion in the employee-owned company world." As Cropp explained: "If the company is sold... (the ESOP) is basically a plan that has no assets and gets wound down."

Vendor Impact and Preference Actions

The bankruptcy left Vermont vendors with unpaid balances. Green Mountain Mulch, a local supplier, was owed over $81,000 at the time of filing. Owner Daniel St. Onge stated that he and most of Gardener's vendors were unlikely to fully recoup what they were owed.

The Debtors have pursued preference recovery actions against certain vendors. On December 17, 2025, the Debtors filed two Rule 9019 settlement motions:

The Debtors also filed their First Omnibus Claims Objection on December 11, 2025, challenging claims on substantive grounds. Multiple counter-objections were filed by affected creditors on December 23, 2025, with resolution pending before confirmation.

Professional Retentions

Key Timeline

Industry Context

Competitive Pressures.

Gardener's Supply faced competition from big-box retailers. According to the 2024 Garden Center State of the Industry Report, Home Depot captured 32.2% of garden supplies purchases and 33.9% of garden plants purchases—approximately 20% higher market share than independent garden centers.

As Ashley Mullen, director of retail, explained in court filings: "Over the past two years, America's Gardening Resource has been working diligently to recover from the post-COVID downturn in business. Despite cost-cutting measures, the challenges posed by increased competition, rising shipping expenses, tariffs and escalating marketing costs have proven insurmountable."

Catalog and e-commerce garden retailers absorb shipping costs for bulky products like soil amendments, planters, and garden equipment.

Post-Pandemic Market Normalization.

The gardening and home improvement sector saw normalization in 2024, four years after COVID-19. Online sales grew 16% in early 2024 compared to the prior year.

Pandemic-era demand pushed Gardener's Supply revenues above $110 million. Employee stock values climbed to record levels, incentivizing long-tenured workers to retire and cash out. When revenues dropped 35% by 2024, the company faced declining sales and ESOP buyback obligations triggered at peak valuations.

The Employee Ownership Model and Payout Dynamics.

The Vermont Employee Ownership Center noted challenges facing employee-owned businesses statewide: over half of Vermont businesses are owned by baby boomers, and succession planning for ESOPs requires careful management of the payout-contribution cycle.

Matthew Cropp, executive director of the Vermont Employee Ownership Center, explained the dynamic: ESOP viability depends on having "this cycling of ownership happening over time rather than happening in one big burst every 20 years." When multiple senior employees retire simultaneously—as occurred at Gardener's Supply when stock values peaked—the resulting payout obligations can overwhelm a company's liquidity.

Other Vermont ESOPs, including King Arthur Baking, Chroma Technology, and PC Construction, were cited as employee-owned businesses in the state. Vermont Information Processing opted to sell rather than attempt to manage retiree buyouts within the ESOP structure.

Frequently Asked Questions

What is Gardener's Supply Company and why did it file for bankruptcy?

Gardener's Supply Company is a Burlington, Vermont-based retailer of gardening products founded in 1983 and made 100% employee-owned in 2009. The company filed chapter 11 after ESOP buyback obligations for retiring employees, post-pandemic sales declines, technology implementation failures costing $5-10 million in revenue, and the loss of its Bank of America credit line.

Who bought Gardener's Supply out of bankruptcy?

Gardens Alive, Inc., an Indiana-based multi-title catalog and e-commerce company founded in 1984, acquired Gardener's Supply for $9 million. The company, led by CEO Felix Cooper and Chairman Niles Kinerk, specializes in organic gardening products and has a history of acquiring distressed garden brands, including its 2001 purchase of six brands from bankrupt Foster & Gallagher. The sale closed on August 7-8, 2025, approximately seven weeks after the chapter 11 filing.

How many potential buyers were contacted?

Tower Partners, the company's investment banker, contacted 1,115 potential buyers, resulting in 51 NDAs, 8 indications of interest, 3 letters of intent, but only one asset purchase agreement—from Gardens Alive.

What happened to the employee stock ownership plan (ESOP)?

ESOP holders (Class 4 equity interests) will receive no distribution under the Plan of Liquidation. The ESOP Trust Company resigned as independent trustee citing persistent post-petition breaches, and equity interests were canceled and extinguished.

Which Gardener's Supply stores are staying open?

Five of six retail locations remain open: the Williston flagship store, the Burlington Intervale location, and stores in New Hampshire and Massachusetts. The seasonal Shelburne, VT store closed, with associates relocated to permanent locations.

How many employees were laid off?

The Vermont Department of Labor confirmed approximately 60 layoffs following the sale, primarily at the Milton distribution warehouse and Burlington call center. E-commerce operations were consolidated to Gardens Alive's 600,000 square-foot fulfillment center in Fairfield, Ohio. Retail store employees at the five continuing locations were retained.

What role did the pandemic play in the bankruptcy?

The pandemic drove a rise and then decline in demand. Revenue reached $110.3 million in 2021 as homebound consumers turned to gardening, causing ESOP stock values to "skyrocket." Revenues then declined to $89.6 million in 2023 and $71.5 million in 2024—a 35% decline from peak. When longtime employees retired and cashed out at peak stock values, the simultaneous payout obligations created liquidity issues.

What were the technology failures that contributed to the distress?

A $500,000 ERP system caused customer fulfillment issues that depressed revenue by $5-10 million. A new Warehouse Management System caused over 60% of customer orders in May 2024 to be delayed by 15-30 days, affecting customer retention.

How much did the company owe to unsecured creditors?

The top 30 unsecured creditors were owed approximately $4.5 million, with UPS being the largest at $913,482.36. Total prepetition unsecured debt was approximately $9.4 million.

When is the confirmation hearing for the liquidating plan?

The combined confirmation hearing is scheduled for January 21, 2026, at 11:00 a.m. ET. General unsecured creditor recovery depends on monetization of remaining assets and Causes of Action, including preference recovery actions against vendors.

What is the Intervale and what is its connection to Gardener's Supply?

The Intervale is a 400-acre sustainable agriculture preserve in Burlington, Vermont, that founder Will Raap helped establish. In 1985, Raap moved Gardener's Supply to five acres at the entrance to the Intervale, and in 1988 he co-founded the non-profit Intervale Center. The Intervale has become a national model for sustainable agriculture and remains home to one of the five continuing Gardener's Supply retail locations.

What was the significance of Gardens Alive's acquisition history?

Gardens Alive has experience integrating distressed garden brands. In 2001, the company acquired six major brands from the bankrupt direct marketer Foster & Gallagher for $10.75 million, including Gurney's, Henry Field's, Spring Hill Nursery, Michigan Bulb, and Stark Bros. This acquisition history reflects prior acquisitions of distressed garden brands.

Who is the claims agent for Gardener's Supply?

Stretto, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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