Company opened stores in Tigard and Cedar Mill in April

by: FILE PHOTO - Orchard Supply Hardware announced Monday that it was filing for Chapter 11 bankruptcy protection, and would be purchased by competitor Lowe's.Less than two months after opening the doors to its first Oregon stores, Orchard Supply Hardware has filed for Chapter 11 bankruptcy protection.

The company, which opened stores in Cedar Mill and Tigard in April, made the announcement Monday, saying that home improvement rival Lowe’s would be purchasing most of its assets, including at least 60 of its stores.

The San Jose-based company said Lowe's planned to acquire the majority of its assets for $205 million, plus assumption of payables owed to nearly all partners after Orchard leaders filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware.

The company made $657 million in the 2012 fiscal year, but claimed it was unable to pay back its debts.

The company owes more than $480 million in liabilities. Its assets total $441 million, the company reported in its bankruptcy petition.

Oregon stores could stay open

Lowe’s will purchase at least 60 of the 91 stores. The stores it doesn’t purchase could be closed. Orchard’s spokeswoman Leigh Parrish said it’s still too early to know whether the Oregon stores will be included in the deal.

“It could be more than 60 stores (that Lowe’s purchases), that’s a minimum number,” Parrish said. “It’s premature to speculate on what number and which locations.”

Orchard’s officials said in a statement that the company will continue to pay employee wages and benefits and honor gift cards and incentive programs during the transition.

Once Lowe’s takes over, Parrish said customers shouldn’t notice much change.

Although owned by Lowe’s, the company will operate as a separate, stand-alone business, with its name, management team and employees.

Sears debts

Orchard’s debts are due, in part, to former parent company Sears, the company said, which owned Orchard until 2011.

Orchard officials said they did not expect to be able to make payments when the first bundle of the company’s debt matures in December. They said filing for bankruptcy would allow the business to keep running and reposition itself.

“In short,” Orchard CEO and President Mark Baker said in a letter to customers on its website, “we’ll be the same Orchard, but we’ll be in a much stronger financial position.”

The Tigard store is located at 9770 S.W. Scholls Ferry Road, the same location as the former Ultimate Electronics store, which closed its doors in 2011, less than six months after opening its first Oregon store at the site.

The Cedar Mill store is at 10860 S.W. Barnes Road.

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