UPDATED: EuroAmerican Propagators files chapter 7 bankruptcy

UPDATED: EuroAmerican Propagators files chapter 7 bankruptcy

Industry weighs in on news since John Rader, COO, confirmed details with the GIE Media Horticulture Group on Tuesday.

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January 25, 2017
Michelle Simakis
Supplier News

UPDATED: 9:15 a.m. Jan. 26, 2017:

GIE Media first reported Tuesday evening that EuroAmerican Propagators filed for chapter 7 bankruptcy protection on Jan. 23 in the U.S. Bankruptcy Court of the Southern District of California. EuroAmerican founders John Rader and Jerry Church were also members of the Proven Winners cooperative, established in 1992. Because, in addition to being their own brand and producing several others, EuroAmerican was a licensed propagator for Proven Winners, GIE Media reached out to Proven Winners to get the company's thoughts on the news.

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, said Mark Broxon, executive director of Proven Winners, on a phone call Wednesday. 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.

“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.”

Broxon says Proven Winners sent an email to brokers in the industry Wednesday afternoon that provided guidance for what they can do with any open Proven Winners orders that were previously placed with EuroAmerican.  
 
“My way of looking at this – from a Proven Winners standpoint – is that the impact is really minimal because either Four Star, Pleasant View, 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”.   

He said he could not comment on the future of the EuroAmerican property because he doesn’t know what will happen with the space, but added that there are no plans to add additional 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,” Broxon says. “We have no plans to make any additions, and I don’t think we need to.”

Chapter 7 bankruptcy traditionally ends in liquidation, with a trustee overseeing the liquidation of the assets and the payment of creditors, according to information from the Administration Office of U.S. Courts. There are other possibilities, but generally chapter 7 ends in the company’s assets being sold and distributed to creditors. Calls to the lawyer and the trustee listed on the bankruptcy filing were not immediately returned. GIE Media reached out to Jerry Church Wednesday, and he said he had no comment.

Jordan Holtkamp, sales representative with Eason Horticultural Resources, responded via email Thursday with a sentiment that is similar to what others in the industry have also shared in recent days.

"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," Holtkamp said. "When 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.'”  

Jim Monroe, owner of Greenbrier Nurseries, wrote about John Rader's legacy in the flowering plant industry, and said that his "heart hurts for the folks [at EuroAmerican.] 

"He took us from a cheap pack marketplace of seed annuals to a high margin 4" market of amazing new plants for mixed containers grown from cuttings," Monroe said.

We will continue to update this story as more information becomes available.

Original story, published
Jan. 24 at 7:03 p.m. and updated Jan. 26 at 7 a.m.:

EuroAmerican Propagators LLC has filed for chapter 7 bankruptcy, according to forms filed in the U.S. Bankruptcy Court for the Southern District of California in San Diego on Jan. 23. John Rader, COO of the Bonsall, Calif., business, confirmed this to the GIE Media Horticulture Group on Tuesday.

EuroAmerican is a young plant and retail-ready producer for more than 20 brands and breeders, specializing in annuals, perennials, grasses, succulents, poinsettias and shrubs, produced on 55 acres of land, according to the company's website. The company also operates trial gardens.

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 is one of the founders of the Proven Winners cooperative, which includes Tom and Sharon Smith of Four Star Greenhouse of Michigan and Henry Huntington of Pleasant View Gardens of New Hampshire.

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, Jerry Church, who is also one of the Proven Winners cooperative founders. Rader and Church partnered in 1992 to purchase the propagation operation from Weidner's Gardens, where Rader was previously production manager. Rader says that before filing, he was looking for a new partner for EuroAmerican after Church told him that he didn't want to be a part of the business anymore.

“The challenges that we’ve had is making that transition to a new partner,” Rader says. “Last night, 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 said he was “purposely being not specific,” but 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 said, 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.

EuroAmerican shared a California Spring Trials-related event on Facebook the day they filed for bankruptcy. When asked about the post and plans for the upcoming trials, scheduled for April 1 - April 6, 2017, Rader said, “That will sort of be a surprise, even to me. There’s some ideas floating around out there about how to do it. It might not be just EuroAmerican, it might be done in a different way. That’s why I have not said no Spring Trials because I would hate to waste the opportunity for people to see some nice, great plants.”  

Vaughn Fletcher, president of Fletcher Consulting, commented on the impact EuroAmerican’s bankruptcy may have on the industry.

“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,” Fletcher said in an email. “Hopefully, these programs or specific plants will be picked up by another liner producer in 2018.”

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."

Rader believes his former employees will also land on their feet and find new opportunities.

“Closure one way or another is always good. I think that they’ll be around. I also think there is plenty with the industry growing the way it is right now here,” Rader says.

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.”

“I actually am very calm, peaceful and actually very excited about what’s ahead and the people who are interested in working with me. I just think that the ... gold rush of color that we were a big part of making happen -- I think that is becoming a smaller market ... and that there are better markets now.”

This is a developing story and will be updated as more information is available.

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