EuroAmerican Propagators files Chapter 7 bankruptcy

EuroAmerican Propagators LLC filed for Chapter 7 bankruptcy protection on Jan. 23, which was confirmed by COO John Rader to the GIE Media Horticulture Group the following day. EuroAmerican is a young plant and retail-ready producer for more than 20 brands and breeders. The company also operates trial gardens. Dean T. Kirby Jr., a lawyer representing the trustee on the case, said in early February that they were trying to determine the value of the plants, the business was being liquidated, and that the company closed operations between Jan. 23 and Jan. 24.

EuroAmerican founders Rader and Jerry Church were part of the founding members of the Proven Winners cooperative, established in 1992, which also includes Tom and Sharon Smith of Four Star Greenhouse of Michigan and Henry Huntington of Pleasant View Gardens of New Hampshire.

Mark Broxon, executive director of Proven Winners, told GIE Media days after EuroAmerican Propagators filed for bankruptcy that other licensed propagators will be able to fill the void left by the Bonsall, Calif.-based company.

The Proven Winners brand and the companies that are licensed propagators for the brand, including Four Star Greenhouse and Pleasant View Gardens, all operate as separate businesses, and they are strong and expanding, Broxon said. The companies do not share financial information, Broxon says, and he was watching what would happen with EuroAmerican as rumors started to spread, just as the rest of the industry was.

“My way of looking at this — from a Proven Winners standpoint — is that the impact is really minimal because either Four Star [Greenhouse], Pleasant View [Gardens], Walters Gardens or Spring Meadow Nursery will carry the same Proven Winners product lines, and they have all added significant amounts of production space and capacity in the past few years due to the continued growth of the brand,” Broxon says. “This change will also have no impact on consumer demand for Proven Winners. Consumer awareness of the brand has never been stronger and demand will only continue to grow.”

The industry saw the writing on the wall and reacted accordingly, he adds.

“People were getting an idea [before the bankruptcy news came out] about what was going on at EuroAmerican. It’s definitely difficult to see, there’s no doubt about it. But the good news is that Four Star and Pleasant View, from a Proven Winners annuals standpoint, stepped in when this news started to break and covered a significant amount of the orders that had been placed with EuroAmerican,” Broxon says. “We’re saddened for EuroAmerican and the people there, but the existing Proven Winners propagators are very strong businesses. They ship throughout the U.S., and they are very focused on the brand. As with any transition, it’s not going to be perfect, but they are making it as smooth as possible.”

Days after the official filing, Broxon says Proven Winners sent an email to brokers in the industry that provided guidance for what they can do with any open Proven Winners orders that were previously placed with EuroAmerican.

Broxon could not comment on the future of the EuroAmerican property because he doesn’t know what will happen to it, but says there are no plans to add more propagators on the West Coast.

“With improved shipping and trucking methods, the existing Proven Winners propagators have customers throughout the country and already ship a surprising amount of product to the West Coast,” he says. “We have no plans to make any additions, and I don’t think we need to.”

Beyond Proven Winners product, the market will likely have difficulty sourcing some of the specialty items that EuroAmerican provided, according to industry sources.

“Resourcing many of the unusual, novelty plants that were exclusive to [EuroAmerican], as well as the wide selection of succulents in liners and the retail-ready succulent bowls will be difficult, if not impossible, to resource this year,” says Vaughn Fletcher, president of Fletcher Consulting. “Hopefully, these programs or specific plants will be picked up by another liner producer in 2018.”

Jordan Holtkamp of Eason Horticultural Resources says the market will miss some of EuroAmerican’s “unique genetics.”

“It’s certainly a shame when we lose a grower/supplier. There were good people working there, so I hope they can find employment elsewhere,” says Holtkamp. “When we lose a producer like that, it narrows the field and lessens the diversity available for consumers. EuroAmerican had some unique genetics themselves that had real potential, so it’s sad they will not be available to the market. It really hurts all of us, whether you’re a sales rep, grower or retailer. Something a customer shared with me I thought was insightful was, ‘If we continue to lose suppliers and options become less and less, we will all start to look the same at our stores.’”

Sid Raisch, industry consultant and CEO of Horticultural Advantage, says he believes that growers and retailers will get through this hurdle.

“The market is resilient, and my best hope is that even though there may be a tight supply of materials that [EuroAmerican] supplied, growers and retailers will figure out what the silver lining might be and make the most of it,” Raisch said in an email. “We have seen disruptions before and we'll see them again, and this time I'm as certain as any that growers and retailers will figure out the opportunities.”

Bankruptcy proceedings

Chapter 7 bankruptcy traditionally ends in liquidation, with a trustee overseeing the distribution of non-exempt property and the payment of creditors, according to information from the Administration Office of U.S. Courts. There are other possibilities, but generally a business doesn't have as many options like other bankruptcy types, and it closes for good.

The court documents indicate only ranges for the company’s current estimated assets, at $0 to $50,000. It has more than 350 listed creditors, and its liabilities range from $1 million to $10 million.

Rader says that bankruptcy is often thought of as a “bad word,” but he sees it as “a new beginning” for both him and his business partner. Rader says that before filing, he was looking for a new partner for EuroAmerican after Church told him that he wanted to pursue other interests.

“The challenges that we’ve had is making that transition to a new partner,” Rader says. “Last night (Jan. 23) after hours and hours with various attorneys, we decided that because this is taking so long, that we better get some protection because a situation of indecision like this and a lack of resolution are going to result in more and more vulnerabilities.”

Rader says that a Chapter 7 filing “gives him more flexibility and options.”

“There are certain things I specialize in doing, and I want to preserve those and how those fit into other companies,” Rader says. “It will free up some of the work that I’m doing to build markets with new suppliers and new vendors.”

EuroAmerican had 180 employees before the filing, Rader says, and that a much smaller “transition crew” would be maintaining the plants and other aspects of the business, but did not provide a timeline for how long or how many employees will remain.

While Rader would not outline his specific plans for new ventures, he’s confident about the decision. He said that in the past 30 years, the industry has changed, and “I’ll be pursuing a type of nursery where we think the new color is green.”

Michelle Simakis is the editor of sister publication Garden Center magazine. msimakis@gie.net

Nursery Management editor Kelli Rodda and Greenhouse Management associate editor Cassie Neiden contributed to this article.