Pike Nursery Files for Bankruptcy

The Southeast’s severe drought conditions, along with historically tight water restrictions, have caused Norcross-based Pike Nursery to file for Chapter 11 bankruptcy protection.

Many smaller plant nurseries and landscaping companies have already laid off thousands of employees and folded up their tents, but Pike’s, the largest independently owned garden center in the U.S., will probably be the first major casualty of one of the driest years on record.

Pike Nursery Holding, LLC owes almost $5.6 million in unsecured debt to its 20 largest creditors, including over $700,000 to its top creditor, Monrovia, a leading California-based ornamental plant grower.

"Our core Atlanta area market is currently suffering from the worst drought in over 100 years," said Pike Chief Executive Scott Schnell.

"This extended drought and resulting water use restrictions have had a material detrimental effect on our business. After careful consideration, we concluded that a Chapter 11 restructuring represents the best long-term solution for Pike," Schnell said.

Wayne Juers, Pike vice president, said that the nursery chain attempted to cut its expenses but the bills were overwhelming. Due to the drought, Pike’s sales are down 35 percent this year.

"What this bankruptcy filing does is give us an opportunity to freeze the debt and get a break from the effects of the drought. We've got nine months to come up with a restructuring plan, and we want to come out of it smarter and hopefully learn from it,” he said. “We're looking at it as a strategic business move to protect our employees so they're not out at this time of the year looking for employment."

Pike’s has secured $11.75 million in additional financing to assist in its operations during the bankruptcy reorganization, and says that business will continue as usual.

The plan allows Pike's to keep its 750 employees on the payroll, though the company wasn't able to hire the usual 200 additional helpers for the fall planting season. The company is also considering closing its Conyers and Lawrenceville locations.

Pike Nursery Holding, LLC, opened its first store in 1958. It now has 22 locations in Georgia, Alabama, and North Carolina, including the store located in Johns Creek at the intersections of State Bridge and Medlock Bridge roads.

The chain was owned by the Pike family until 2004, when Roark Capital Group, a private equity firm, purchased a majority of the company.

Executives at Pike say they made the deal with Roark in order to obtain much-needed capital for major expansion of large retail and wholesale nurseries in Birmingham, Charlotte, and metro Atlanta.

Pike’s has since closed some unprofitable stores and moved others into more advantageous locations. The newer stores are smaller with more manageable inventories.

Mary Kay Woodworth, executive director of the Metro Atlanta Landscape and Turf Association, says that Pike’s filing is only the beginning of an economic fallout for metro Atlanta.

"It's going to continue week by week, month by month. And I don't think we'll recover from this until at least the third quarter of 2008, even with rain," she said. “Going into next year we are going to see significantly more losses."