The Chapter 11 bankruptcy filing last week by Ellett Brothers has disrupted industry suppliers. The South Carolina-based distributor, which has a long list of marine suppliers, said it plans to close its facility in Chapin by August. It will lay off 170 workers.
The company was forced to file for bankruptcy in Delaware, where its parent company, United Sporting, is based. One of its lenders, Prospect Capital, filed a lawsuit against United Sporting’s owner, Wellspring Capital Management.
United Sporting’s chief restructuring officer, Dalton Edgecomb sent a notice about the layoffs last week. “This closure will be permanent and will constitute a plant closing,” Edgecomb wrote. “Although Ellett Brothers LLC will continue to exist, it will be a significantly smaller organization.”
The lawsuit alleges that Wellspring and its partnerships guided Ellett Brothers into financial ruin by taking $189 million in loan money away from the business and instead paying cash to executives, investors, shareholders and others, according to TheState.com.
“They’ve been a pretty strong distributor of ours in the Southeast,” Brandon Wollard, director of eastern U.S. sales for Prospec Electronics told Trade Only Today. “We’d heard the rumors about their financial troubles so we’ve been keeping a close eye on them for the last six months. But they continued to sell our products.”
Wollard said he has heard rumors about other distributors possibly buying the company’s marine distribution business.
Ellett Brothers sold marine electronics, trolling motors by Minn Kota and Motorguide, as well as props and trolling motor accessories. It listed such clients as Lowrance, Sea-Dog, Shakespeare and dozens of others from the industry.
“It’s a shame to see a company like that go under,” Wollard said. “They provided another option for distribution in the Southeast and were moving a decent amount of product in that region.”