A massive real estate firm has now filed for an unexpected Chapter 11 bankruptcy as it owes more than $1 million.
Epic Companies is a West Fargo based real estate investing and development firm that has now declared bankruptcy.
This filing in the federal bankruptcy court says that the developer, commercial and residential property management and ownership company has assets of $10 million to $50 million and liabilities that are also between $10 million and $50 million.
Unsecured creditors listed in the bankruptcy petition include individuals that have invested with Epic as well as companies that are owned money for their work.
One of the largest unsecured creditors is a Twin Cities-based landscaping company, Otten Brothers.
The company says that it is owed more than $1 million.
These individual investors include residents from across Minnesota and North Dakota, Florida as well as other states.
KFGO News first reported that Epic employees were laid off and its contractors complained that they had not been paid for the work that they had already completed.
Since then, the Epic-managed properties in Fargo, West Fargo, Moorhead, Bismarck, Minot, Jamestown and Perham, Minnesota have been placed under new management.
Epic Companies has been placed under investigation by the North Dakota Securities Department which was later confirmed by Attorney General Drew Wrigley calling it “a concerning matter,” reports KFGO.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.
Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.
Supply Source brands include The Safety Zone and Impact Products.
The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.
Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.
Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products
The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.
However, the company’s financial performance deteriorated in subsequent years.
Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.
The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.
In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.
Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.
The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.
The excess inventory forced the debtor to secure additional storage space, which increased storage costs.
These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.
The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.
The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.
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Also Read: This Massive Mall Retailer Is Now Closing In California
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