Gardener's Supply Bankruptcy: $9M Sale Ends 38-Year Employee Ownership
Gardener's Supply filed chapter 11 June 20, 2025, after ESOP buyback obligations, a 35% revenue decline to $71.5M, and technology failures. Gardens Alive acquired the assets for $9M; five of six stores remain open. ESOP holders received no distribution under the confirmed liquidating plan.
America's Gardening Resource, Inc., the Burlington, Vermont parent of employee-owned retailer Gardener's Supply Company, ended 38 years of employee ownership when it sold its business to Gardens Alive, Inc. for $9 million in August 2025 and confirmed a chapter 11 plan of liquidation in March 2026 that left ESOP holders with no distribution. The company filed for chapter 11 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, two failed technology rollouts, and a Bank of America default, as detailed in the First Day Declaration. Revenue that peaked at $110.3 million in 2021 had fallen to $71.5 million by 2024. Gardens Alive, a serial acquirer of distressed garden brands, was the only bidder to submit an asset purchase agreement after Tower Partners contacted 1,115 potential buyers; the court entered the Sale Order on August 4, 2025, and the sale preserved five of six retail locations and the SERAC manufacturing facility.
| Debtor(s) | America's Gardening Resource, Inc. (5 jointly administered entities, dba Gardener's Supply Company) |
| Court | U.S. Bankruptcy Court, District of Delaware |
| Case Number | 25-11180 (lead case) |
| Petition Date | June 20, 2025 |
| Plan Type | Chapter 11 Plan of Liquidation |
| Sale Closing | August 7-8, 2025 |
| Confirmation Date | March 5-6, 2026 |
| Buyer | Gardens Alive, Inc. |
| Purchase Price | $9,000,000 |
| Stalking Horse Protection | $360,000 break-up fee (4%) |
| Funded Secured Debt | ~$8.2 million |
| Top 30 Unsecured Creditors | ~$4.5 million |
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Employee Ownership and Five-Entity Structure
Gardener's Supply Company began in 1983 as a Burlington, Vermont catalog retailer of organic gardening tools, founded by Will Raap and Alan Newman. Raap moved operations to the Intervale, a 400-acre agricultural preserve he helped establish, adopted an Employee Stock Ownership Plan in 1987, and sold his remaining stake in December 2009, making Gardener's Supply 100% employee-owned. At its peak the company reported more than $100 million in annual sales and 300 year-round employees.
The chapter 11 cases cover five jointly administered debtors led by America's Gardening Resource, Inc. (Case No. 25-11180). The court entered the Joint Administration Order consolidating the parent with Gardeners Home LLC, IGH, Inc., Serac Corporation—which operates the SERAC manufacturing facility in Georgia, Vermont—and Innovative Gardening Solutions, Inc., the operating entity that carried roughly $9.4 million in prepetition unsecured debt. At filing the company ran six retail garden centers in Vermont, New Hampshire, and Massachusetts, an e-commerce warehouse in Milton, Vermont, and a Burlington call center, with 126 full-time and 281 part-time employees.
ESOP Buybacks, Failed Technology, and Competitive Pressure
Pandemic boom and reversal. Sales rose during the pandemic as homebound consumers turned to gardening, reaching $110.3 million in 2021 and $105.4 million in 2022, then declined to $89.6 million in 2023 and $71.5 million in 2024, a 35% drop from peak. The decline coincided with intensifying competition from big-box retailers: in court filings, retail director Ashley Mullen attributed the company's distress to "increased competition, rising shipping expenses, tariffs and escalating marketing costs," which she described as insurmountable despite cost-cutting. The 2024 Garden Center State of the Industry Report put Home Depot's share of garden supply purchases at 32.2%.
ESOP buyback obligations. The pandemic-era stock appreciation created a liquidity problem when long-tenured employees retired and cashed out their shares at record valuations. When several senior leaders left at the same time, the company became liable for potentially millions of dollars in simultaneous buybacks, which the CRO declaration described as "significant liquidity issues." Annual compliance and valuation costs associated with ESOP ownership added further cash demands.
Two failed technology rollouts. A new Enterprise Resource Planning system that cost $500,000 caused customer fulfillment problems that management estimated depressed revenue by $5 million to $10 million. A new warehouse management system delayed more than 60% of customer orders in May 2024 by 15 to 30 days during peak season.
Bank of America default. The company fell out of compliance with its Bank of America line of credit in the third quarter of 2023. Bank of America determined that cash generated during the pandemic surge had been paid out as equity to shareholders rather than retained, and in October 2024 it placed a lien on the Burlington headquarters before terminating access to the credit line. The company filed its voluntary chapter 11 petition on June 20, 2025.
Prepetition Debt and Cash Collateral
The company carried roughly $8.2 million in funded secured debt, comprising the Bank of America line of credit, Bank of America equipment loans serviced at $20,471.81 monthly, and a secured position held by Northfield Savings Bank. Unsecured exposure totaled approximately $9.4 million, of which the top 30 unsecured creditors were owed about $4.5 million; UPS was the largest at $913,482.36. The company held roughly $4.0 million to $4.2 million in cash at filing.
The Debtors filed a Cash Collateral Motion and used Bank of America's cash collateral under court-approved terms permitting a 10% budget variance. Adequate protection included replacement liens on postpetition assets, monthly interest at the contract rate on the line of credit, continued $20,471.81 equipment payments, and section 507(b) superpriority claims for any diminution in value. The authorization ran through a termination date of July 18, 2025.
Tower Partners Marketing and the Gardens Alive Sale
Marketing process. The Debtors engaged Tower Partners, LLC as investment banker on December 17, 2024, and the firm ran a prepetition marketing process described in its retention application. Tower Partners contacted 1,115 potential buyers, executed 51 non-disclosure agreements, received 8 indications of interest and 3 letters of intent, and obtained one asset purchase agreement, from Gardens Alive, Inc.
Stalking horse and auction. The Debtors filed the Sale and Bidding Procedures Motion on the first day of the case, designating Gardens Alive as stalking horse at a $9 million purchase price with a $360,000 break-up fee equal to 4%. The court entered the Bidding Procedures Order on July 10, 2025, setting a July 15 bid deadline and a July 18 auction if a topping bid arrived. No topping bids were received, Gardens Alive was designated the successful bidder, and the sale closed on August 7-8, 2025.
The buyer. Gardens Alive, Inc., led by CEO Felix Cooper, is a privately held Indiana catalog and e-commerce company founded in 1984 that has grown by acquiring distressed garden brands; in 2001 it acquired several brands from the bankrupt direct marketer Foster & Gallagher for $10.75 million.
Post-acquisition footprint. Gardens Alive retained five of six retail garden centers, the SERAC manufacturing facility, and the Gardener's Supply brand, while closing the seasonal Shelburne store, the Burlington call center, and the Milton distribution warehouse and consolidating e-commerce fulfillment to its Fairfield, Ohio center. The Vermont Department of Labor confirmed approximately 60 layoffs, primarily at the Milton warehouse and Burlington call center; associates at the five continuing stores were retained.
Liquidating Plan and ESOP Cancellation
On November 3, 2025, the Debtors filed a Combined Disclosure Statement and Chapter 11 Plan of Liquidation, amended on December 4, 2025. The plan winds down the estates following the completed sale, with distributions funded from remaining assets and recoveries on causes of action, including preference claims.
| Class | Description | Status | Treatment | Recovery |
|---|---|---|---|---|
| Class 1 | Other Secured Claims | Unimpaired | Return of collateral, cash, or agreed treatment | 100% |
| Class 2 | Priority Non-Tax Claims | Unimpaired | Cash equal to claim or agreed treatment | 100% |
| Class 3 | General Unsecured Claims | Impaired (voting) | Pro rata share of available cash | 2-5% |
| Class 4 | Equity Interests (ESOP) | Impaired | Canceled and extinguished | 0% |
General unsecured recovery. Class 3, the only impaired voting class, is paid from funds remaining after secured, administrative, and priority claims. The $4.5 million owed to the top 30 unsecured creditors forms part of that pool, and the amended plan projects a 2% to 5% recovery for general unsecured creditors, with final distributions dependent on monetization of remaining assets and preference recoveries.
Disclosure statement and confirmation. Richard Simpson filed an objection to the Disclosure Statement on November 24, 2025. The court entered the Disclosure Statement Approval Order on an interim basis on December 3, 2025, set a combined hearing for January 21, 2026, and entered the Confirmation Order on March 6, 2026 following a March 5 hearing.
ESOP cancellation. The ESOP Trust Company filed a Motion to Compel immediate assumption or rejection of the ESOP agreement, which the court granted on September 25, 2025. The court later entered orders rejecting the ESOP Trustee Agreement and the ESOP Trust Agreement on March 5, 2026. The ESOP Trust Company resigned as independent trustee citing "persistent post-petition breaches," and Class 4 ESOP holders receive no distribution.
Professional retentions. The Debtors retained Cole Schotz P.C. as counsel and Tower Partners as investment banker on a $500,000 fee, with Aurora Management Partners Inc. serving as financial advisor and David M. Baker as chief restructuring officer. Stretto, Inc. is the claims and noticing agent. The official committee of unsecured creditors retained Gibbons P.C. as counsel and Dundon Advisers LLC as financial advisor.
Vendor Claims and Preference Actions
The filing left Vermont vendors with unpaid balances. Green Mountain Mulch, a local supplier, was owed more than $81,000, and owner Daniel St. Onge said he and most of Gardener's vendors were unlikely to fully recoup what they were owed.
The Debtors are pursuing preference recoveries. On December 17, 2025, they filed two Rule 9019 settlement motions covering alleged preferences against Eastern Shore Nursery of Virginia ($56,689.66) and Listrak Inc., both with terms under court review.
The Debtors also filed their First Omnibus Claims Objection on December 11, 2025, challenging claims on substantive grounds. Affected creditors filed counter-objections on December 23, 2025, with resolution pending before confirmation.
Key Timeline
| Date | Event |
|---|---|
| 1983 | Gardener's Supply Company founded in Burlington, VT |
| 1987 | Gardener's Supply ESOP adopted |
| December 2009 | Gardener's Supply becomes 100% employee-owned |
| Q3 2023 | Debtors fall out of compliance with Bank of America line of credit |
| 2024 | Revenue declines to $71.5 million |
| October 2024 | Bank of America places lien on Burlington headquarters |
| December 17, 2024 | Tower Partners engaged as investment banker |
| June 20, 2025 | Chapter 11 petitions filed |
| June 25, 2025 | Interim Cash Collateral Order entered |
| July 2, 2025 | Official Committee of Unsecured Creditors appointed |
| July 10, 2025 | Bidding Procedures Order entered |
| July 15, 2025 | Bid deadline (no topping bids received) |
| August 4, 2025 | Sale Order entered |
| August 7-8, 2025 | Sale to Gardens Alive closes ($9M) |
| August 6, 2025 | Vermont Labor Department confirms ~60 layoffs |
| September 25, 2025 | ESOP Trust Company motion granted |
| October 15, 2025 | Bar Date Order entered |
| November 3, 2025 | Combined Disclosure Statement and Plan filed |
| December 3, 2025 | Disclosure Statement Approval Order entered |
| December 11, 2025 | First Omnibus Claims Objection filed |
| December 17, 2025 | Rule 9019 settlement motions filed |
| March 5-6, 2026 | Confirmation Order entered |
Frequently Asked Questions
Who bought Gardener's Supply out of bankruptcy?
Gardens Alive, Inc., an Indiana-based catalog and e-commerce company founded in 1984, acquired Gardener's Supply for $9 million. Gardens Alive has a history of buying distressed garden brands, including its 2001 purchase of several brands from bankrupt Foster & Gallagher. The sale closed on August 7-8, 2025, about 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. That process produced 51 non-disclosure agreements, 8 indications of interest, and 3 letters of intent, but only one asset purchase agreement, from Gardens Alive.
What happened to the employee stock ownership plan (ESOP)?
ESOP holders, classified as Class 4 equity interests, receive no distribution under the plan of liquidation. The ESOP Trust Company resigned as independent trustee citing persistent post-petition breaches, and the equity interests were canceled and extinguished.
Which Gardener's Supply stores are staying open?
Five of six retail locations remain open: the Williston flagship, the Burlington Intervale location, and stores in New Hampshire and Massachusetts. The seasonal Shelburne, Vermont store closed.
Has the liquidating plan been confirmed?
The court entered the Confirmation Order on March 6, 2026 following a March 5 hearing. The amended plan projects a 2% to 5% recovery for general unsecured creditors, with final distributions depending on monetization of remaining assets and preference recoveries.
Who is the claims agent for Gardener's Supply?
Stretto, Inc. serves as the claims and noticing agent for the five jointly administered debtors. The court entered the bar date order on October 15, 2025, which governs the claims process in the case.
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This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
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