Armstrong Flooring has filed for bankruptcy protection, saying it couldn't raise prices high enough to keep up with rising supply and transportation costs.
The Chapter 11 filing came after the company spent months trying to find a buyer and haggling with lenders, according to court papers filed in U.S. Bankruptcy Court in Wilmington, Del. Armstrong said it owed creditors $317.8 million.
"Simply stated, the company's increasing costs significantly outpaced its pricing power," Armstrong Chief Executive Officer Michel S. Vermette said in a court filing.
The maker of vinyl sheets and tiles is the latest company to seek court protection from creditors to deal with spiraling costs and weak sales from the lingering economic woes caused by the covid-19 pandemic.
Last year, the company was hit with $85 million in additional product and transportation costs, Vermette said. Raising prices for retail customers by 10% and for commercial customers by 15% was not enough to keep Armstrong's finances afloat. A Chapter 11 filing allows a company to keep operating while it works out a recovery plan.
The company, based in Lancaster, Pa., plans to continue working with advisers at Houlihan Lokey Capital to find a buyer.
As it struggled with higher costs, the company also haggled with lenders who imposed harsh restrictions that hampered Armstrong's turnaround efforts, the CEO said in court papers. The company had started to modernize operations early 2020 as the pandemic began to hit.
The case is Armstrong Flooring Inc. 22-10426, U.S. Bankruptcy Court, District of Delaware (Wilmington).