YANKEE DISTRICT OF THE AMERICAN ROSE SOCIETY


A LOOK AT THE JACKSON & PERKINS AND WEEKS BANKRUPTCIES

Bruce M. Monroe

Recently both Jackson & Perkins and Weeks Wholesale Roses, two of the largest and best known companies in the rose industry, filed for bankruptcy.  This was followed by reports that these companies had gone out of business.  I have tried to discover what actually happened.  The following is based on news accounts, press releases, company websites, and publicly available court filings.  I’ve tried to present the situation as it is now, October, 2011, but, like any business situation, it is evolving and subject to change with the next press release, financial statement, or court decision.

Jackson & Perkins

Jackson & Perkins was founded in 1872, when Charles Perkins and his father-in-law, A. E. Jackson, started wholesaling strawberries and grape plants from a farm in Newark, New York.  Roses became an important part of the business in 1901 following the success of ‘Dorothy Perkins’.  In 1966 the company was acquired by Harry and David, and operations were moved to the west coast.  Harry and David Holdings, which had been owned by a Japanese pharmaceutical company, was purchased by private investors in 2004 for $252.9 million and is now privately held. 

On April 10, 2007, Harry and David Holdings sold the Jackson & Perkins business to “J & P Acquisition” for about $21 million.  Not included in the sale were 3,200 acres and associated buildings and equipment located near Wasco, California, so J & P Acquisition no longer had the former company’s California production facility.  [In an unrelated action, Harry and David Holdings filed a Chapter 11 bankruptcy in Delaware on March 28, 2011.]

J & P Acquisition was owned by Donald and Glenda Hachenberger, of Lake Mary, Florida, and their children's trust fund.  Although the Hachenbergers owned an interest in Park Seed, their background was real estate.  They had owned RE/MAX Florida and part of RE/MAX Carolina, which they sold in April 2007, about the same time they bought J & P.

Founded in 1868 in Pennsylvania, Park Seed moved to South Carolina in 1924.  In 1975 Park Seed acquired Wayside Gardens and moved it from Ohio to South Carolina.  Park Seed was family owned until 2005.  How Donald Hachenberger acquired the company is not completely clear from what I have been able to find.  Apparently there was a squabble in the Park family, and Donald Hachenberger acquired an interest in the company when he helped Karen Park Jennings, granddaughter of the founder, acquire control.  This appears to have been followed by extensive litigation between Donald Hachenberger and Karen Park Jennings in both state and federal court, but I have not been able to locate any of the details.  However, in 2010, both Hachenbergers agreed that Donald Hachenberger owned 100% of Park Seed.

Charles “Chas” Fox was named president of J & P Acquisition.  Fox graduated from Furman University with a degree in Business Administration & Computer Science.  A fourth round draft pick as a wide receiver in the NFL draft, he played in four games for St. Louis in 1986, catching five passes for a total of 59 yards and one touchdown.  After opening and operating a now-defunct nursery in South Carolina, he founded Southern Sun Biosystems to market a plant propagation system.  Donald Hachenberger bought Southern Sun in 2003 and retained Fox as president.  He named Fox president of Park Seed when it was acquired.  Although Fox had operated a nursery that supplied plants to retail outlets, he does not appear to have had any experience in the mail order/internet nursery business.  With J & P Acquisition added, Fox was simultaneously president of Southern Sun, Park Seed (which included Wayside Gardens), and J & P.  Donald Hachenberger denies any involvement in the management of Park Seed or J & P.

Things did not go well for the combined companies.  In 2009 their sales reportedly declined 29%, from $61.6 million to $43.7 million. Lawsuits began to pile up as bills went unpaid.  By 2010, Park Seed, J & P Acquisition, and/or the Hachenbergers had been sued by, among others, Harry & David Holdings, David Austin Roses, and Poulsen Roser.

On April 2, 2010, Park Seed and J & P Acquisition and their associated subsidiaries filed for bankruptcy in South Carolina under Chapter 11 of the Bankruptcy Act.  Chapter 11 allows reorganization and continuation of the business, as opposed to a Chapter 7 filing, which provides for liquidation of the business.  The court-appointed trustee found that the companies were chaotic, lacked detailed records and had been mismanaged for a long time.  Although Park Seed and J & P were separate legal entities, the trustee said that their affairs had become so mixed it was impossible to separate them.  The bankruptcy court, finding that their affairs were “hopelessly entangled”, consolidated the companies for sale.  The combined companies were sold at auction for $12.8 million on August 23, 2010.

The winning bidder was “J & P Park Acquisitions”, a company owned by Blackstreet Capital Partners.  “J & P Park Acquisitions” should not be confused with “J & P Acquisition”, the entity that the Hachenbergers used to acquire Jackson & Perkins.  Blackstreet also agreed to keep the company in South Carolina for at least three years.  Park Seed is a major employer in Greenwood, South Carolina, and its acres of trial gardens are the centerpieces of the South Carolina Festival of Flowers, which bring thousands of visitors to the company's headquarters each June.

Blackstreet Capital Partners appears to be a turn around specialist.  According to its website, “Blackstreet focuses on control buyouts of under-performing corporate orphans with $25-$150 million of revenue, primarily located in the eastern half of the United States.”  With respect to J & P Park Acquisitions (“JPPA”) the web site says that the Park Seed, Wayside Gardens, and Jackson & Perkins brands now owned by JPPA “have a strong heritage and are very well known in the horticultural industry.  In receiving the necessary capital and financial and operational oversight, JPPA believes it is well positioned to grow and continue to provide its customers with the highest quality products.”  (http://www.blackstreetcapital.com/Portfolio/JPParkAcquisitionsInc.asp)

Weeks Wholesale Rose Grower

Weeks Wholesale Rose Grower was owned by International Garden Products (“IGP”), a holding company.  IGP was formed in 1996 and in the following two years acquired several companies in the horticulture industry.  At the time of the bankruptcy filing, Weeks and Iseli Nurseries were IGP’s only operating companies.  IGP and its subsidiaries filed a Chapter 11 bankruptcy in Delaware on October 4, 2010.  According to documents filed with the court, two of the contributing factors were the recession and the J & P bankruptcy.

Iseli Nurseries produces high quality conifers and Japanese Maples for independent garden centers and landscapers throughout the United States, making its sales highly dependent on the housing market.  Iseli had gross revenues of $23.2 million in 2008, $17.6 million in 2009, and was estimated to have gross revenues of $15.0 million in 2010, a decrease of 35% in two years.  Weeks had gross revenues of $14.6 million in 2008 and 11.5 million in 2009.  Weeks’ revenues were estimated to increase to $13.3 million in 2010.

In 2007, when J & P appeared to be a financially sound business, Weeks contracted with J & P to produce rose plants for delivery to J & P in December 2009.  However, due to its financial problems J & P was unable to take delivery, resulting in a $1.7 million dollar loss to Weeks.  This may have distorted Weeks’ sales figures for 2009 and 2010, decreasing sales in 2009 and increasing sales in 2010 as Weeks attempted to sell the plants that J & P had been unable to accept.  Weeks’ sale of these J & P rose plants may have led some to conclude, incorrectly, either that Weeks had purchased J & P or that J & P had been liquidated and Weeks had purchased their inventory.

During the bankruptcy, Weeks and Star Roses were able to negotiate a settlement of all outstanding issues between them, including payment of outstanding royalties.  Had this agreement not been reached and approved by the bankruptcy court, it appears that the Weeks bankruptcy could have damaged Star’s financial position just as J & P bankruptcy helped to undermine Weeks.

IPG, Weeks, and Iseli Nurseries were purchased by “IPG Acquisition LLC” at a bankruptcy auction on May 16, 2011.  IPG Acquisition is owned by Gardens Alive!, Inc., of Lawrenceburg, Indiana, and appears to be an entity created by Gardens Alive! to acquire Weeks and Iseli.  Gardens Alive is owned by Niles Kinerk, who allegedly started Gardens Alive! in his kitchen and garage in the early 1980’s. 

Gardens Alive! has been a frequent bidder at bankruptcy auctions.  In October, 2001, Gardens Alive! purchased the assets of Foster & Gallagher at a bankruptcy auction.  These assets included Breck's Bulbs, Henry Fields, Gurney's Seed & Nursery, and Michigan Bulb Company.  Gardens Alive! was an unsuccessful bidder for Jackson & Perkins, Wayside Gardens, and Park Seed.  Although Gardens Alive! offered more than the successful bidder for the combined companies, its bid was rejected because it would not agree to keep the combined companies in South Carolina.  In addition to those mentioned above, Gardens Alive! also owns Spring Hill Nursery, Audubon Workshop, the Flower of the Month Club, and Rocky Meadow Orchard & Nursery. 

What Next?

So what does the future hold for these companies?  Both companies filed under Chapter 11 of the bankruptcy law, which gives a troubled business an opportunity to put its house in order and continue to operate.  Although many companies do not survive a Chapter 11 filing, some do.  Bankrupt airlines keep flying; General Motors and Chrysler continue to make cars; Muzak persists in annoying us with elevator music; and, despite multiple bankruptcies, Donald Trump’s operations keep on going like the Energizer bunny.

Park Seed/Wayside Gardens/J & P are now combined into a single company under a new owner, which claims to have the necessary capital and the managerial and financial expertise to convert the combined companies into a profitable enterprise.  All three web sites are up and running.  But it faces the formidable task of repairing relations with its suppliers and customers.   Apparently, the new owners feel that hanging out an “Under New Ownership” sign would do more harm than good.  The only indication of the new ownership I could find on the websites was in the copyright notice in the fine print at the bottom of the home pages, which indicates that the copyright is owned by “J & P Park Acquisitions, Inc.“  The choice of names for the new entity may be unfortunate because it is easily confused with “J & P Acquisition”, the name of the former owner.  One individual has told me that he received a threating letter from a J & P attorney for incorrectly reporting on the internet that J & P was bankrupt and had gone out of business.  This is not a good way to repair relations with potential customers.  Keith Zary, who hybridized about a dozen AARS winners for J & P including ‘Gemini’ and ‘Walking on Sunshine’, left J & P and is now with Springhill/Gardens Alive! in Tipp City, Ohio.  He heads their R&D department, working with a variety of ornamentals and fruit. 

Blackstreet Capital’s business plan appears to be to take over an unprofitable business, make it into a profitable business, and then sell it.  So J & P is likely to have another new owner in two to four years.  With neither a hybridizer nor the former J & P’s California production facility, it appears that, for the immediate future, J & P is going to concentrate on catalogue and internet marketing of roses developed and grown by others.  Where it will obtain rose plants for sale is yet to be seen. 

Week also has a new owner.  I was somewhat surprised that Gardens Alive! purchased Weeks and Iseli.  Both companies are producers of plants for the wholesale trade.  They sell to garden centers and landscapers but not to the retail market.  The business of Gardens Alive! and its numerous companies has been to market directly to the consumer through catalogs and now through the internet.   So this appears to be a departure from its previous business model.  How successful it will be remains to be seen.

Summary

J & P and Weeks haven’t gone out of business.  Each is under a new owner.  What changes the new owners will make to restore these companies to profitability and what effect this will have on the availability of rose plants and new rose varieties remains to be seen.

 

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Last updated 11/13/2011