If you’ve ever push-mowed a lawn or used a snow blower, there’s a good chance you were running a Briggs & Stratton motor. For over 100 years, the Wauwatosa-based manufacturer dominated the market for small engines. Now, it has filed for Chapter 11 bankruptcy.
Why Briggs & Stratton Filed for Bankruptcy
The company, which at one time employed 11,000 people in the Milwaukee area alone, has struggled to turn a profit in recent years. The economic downturn caused by the COVID-19 pandemic seems to have made things worse. After the company skipped a $6.7 million interest payment on its substantial debts in June, the writing was on the wall. However, this is not the end for Briggs & Stratton.
Chapter 11 bankruptcy is also known as reorganization bankruptcy, and that is exactly what Briggs & Stratton intends to do. Instead of winding down operations and closing up shop, they intend to regroup, retool, and reemerge with new owners.
KPS Capital Partners LP, a private equity firm that owns a lot of manufacturing companies, agreed to buy all of Briggs’ assets for approximately $550 million. A higher bidder could come in, but when a deal like this is so broadly announced that rarely happens.
KPS is also providing funding so Briggs & Stratton can continue to operate while their case makes its way through the bankruptcy courts. This is not uncommon. As the likely buyer, KPS will want to protect its investment, and that means keeping it up and running and making whatever money it can.
According to the Milwaukee Journal Sentinel, “The private equity firm also said it has entered into an agreement in principle with the United Steelworkers of America for a new collective bargaining agreement for Briggs hourly employees represented by the union in the Milwaukee area. The agreement would become effective upon completion of the acquisition and reorganization.” This is a big hurdle to clear so smoothly.
One thing that is particularly interesting about the KPS deal is that the buyer has already announced it intends to aggressively grow the company through “strategic acquisitions.” This is quite the change from the message Briggs & Stratton was sending out pre-bankruptcy. Earlier this year, the company announced it would sell off parts of its business. This change in direction highlights the way filing for bankruptcy can open up new options for a business. Avenues that were previously closed can open back up after debts are reduced and the business leaders have space to craft a clear vision for the future.
Bankruptcy Opens New Doors
As we weather the current economic downturn it is likely that more businesses will find themselves the same situation as Briggs & Stratton. But as their current plan for moving forward shows, this is not a bad thing. Bankruptcy opens new opportunities and can allow a company on the edge to survive and thrive. The business-minded legal team at Hanson & Payne has helped countless business owners and commercial lenders in the Milwaukee area navigate the bankruptcy system. We would be honored to assist you during your time of need.