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This is a view of Armstrong Flooring's Lancaster plant at 1067 Dillerville Road on Monday, July 11, 2022.

This is a view of Armstrong Flooring's Lancaster plant at 1067 Dillerville Road on Monday, July 11, 2022.

A bankruptcy judge cleared a final hurdle Friday morning for the sale of Armstrong Flooring’s North American assets to a group led by Mountville-based AHF Products, and by Friday evening the companies said the deal should close Monday morning.

Hundreds of local jobs were hanging in the balance as a dispute over the use of naming rights threatened to derail the sale and then led to talks that extended into Friday evening.

Following a 10 a.m. Friday hearing on AHF Products’ right to use the “Armstrong” name and trademarks after a sale, Judge Mary Walrath ordered Armstrong World Industries to deliver written consents specifying that the sale would give AHF Products the right to use the Armstrong name on its flooring. Armstrong World Industries had been withholding those written consents, which are a condition of the sale.

Armstrong World Industries provided the consents by 3 p.m. Friday as required by the judge but had also said it planned to appeal Walrath's ruling. Just before 7 p.m., AHF Products and Armstrong World Industries issued a joint statement announcing the pending sale and and said they resolved the dispute over use of the Armstrong name.

“This is a result that satisfies both AWI and AHF Products,” the statement said. “Armstrong World Industries and AHF Products are both local Lancaster County businesses and have a vested interest in maintaining good paying, local jobs, as well as safeguarding the integrity of the Armstrong brand name.”

After the joint statement was issued, Armstrong World Industries spokeswoman Jennifer Johnson said Armstrong World Industries would not appeal the bankruptcy judge's ruling for the sale of Armstrong Flooring's North American assets. But she said the company has appealed the ruling as it relates to the sale of Armstrong Flooring's assets in China and Australia.

Along with Gordon Brothers Commercial & Industrial of Boston, AHF Products agreed to pay $107 million for the North American assets of Armstrong Flooring. The sale would include the Lancaster plant along Dillerville Road as well as plants in Beech Creek Township, Pennsylvania, and Kankakee, Illinois.

Separate agreements have been made for the sale of Armstrong Flooring’s Chinese and Australian operations, with all of the deals totaling $203 million.

“Armstrong is a great addition to our broad family of brands, allowing us to broaden our customer base, and broadening our customer base is what allows us to grow the plants,” AHF President and CEO Brian Carson said in the joint statement Friday evening. “What’s most important to AHF is that we get these operations healthy and profitable. It’s profitability that enables growth. As the business grows, the jobs grow. For these plants, we feel the best days are ahead.”

While the joint statement did not provide detail about the arrangements that resolved the naming rights issue, it brought to an end the tension of the past several days, when court filings revealed that Armstrong Flooring and its former parent company, Armstrong World Industries, were at odds over Armstrong Flooring’s understanding that use of the Armstrong name on flooring products would transfer to AHF Products as a part of the sale.

Armstrong Flooring was granted that right when it was spun off from Armstrong World Industries in 2016, but as part of the bankruptcy sale, it had to get Armstrong World Industries to sign consents that acknowledge that rights to the name will go to AHF Products.

According to Armstrong Flooring court filings, the first sign of trouble over the consents came in late June, and this week Armstrong Flooring filed suit, asking the bankruptcy court to force Armstrong World Industries to sign the consents.

In that court filing, Armstrong Flooring had warned that if it couldn’t close the deal Friday because it lacked the written consents, the company would likely face liquidation as it ran out of money to continue operating.

While the Armstrong Flooring’s Lancaster County production plant and warehousing operations are expected to continue under AHF Products, many of the local employees of Armstrong Flooring will likely find themselves out of work.

As of May, Armstrong Flooring had 606 employees in Lancaster County, which included about 390 who were assigned to the company’s Greenfield headquarters and research and design center.

Carson said the company plans to keep 90% of Armstrong Flooring’s current plant workforce, which includes the roughly 200-plus employees at the Dillerville Road plant. However, it won’t be using Armstrong Flooring’s former Greenfield locations. Some of those employees may move to AHF Products headquarters in Mountville, but most will likely lose their jobs.

AHF Products did not specify how many former Armstrong Flooring employees will join AHF Products, but Carson had said many of the office workers aren’t needed.

After Armstrong World Industries spun off Armstrong Flooring in 2016 as its own company, Armstrong Flooring sold its wood flooring business, AHF Products, two years later to private equity firm American Industrial Partners in for $100 million.

Carson spent 16 years at Armstrong World Industries before leaving in 2006. He returned to Lancaster in 2019 to become the first president and CEO of AHF Products and has guided its rapid expansion. Without the Armstrong Flooring purchase, AHF has 13 brands, employs more than 2,300 people and has reported annual revenues of more than $400 million.

“AHF Products is the former Armstrong wood flooring business and many of our current employees are AWI alums, including me,” Carson said in the statement issued Friday evening. “We are excited to once again have Armstrong in our family of flooring brands. Armstrong is a wonderful brand that is important to the flooring industry and to Lancaster County.”

During Armstrong Flooring’s bankruptcy, AHF Products was the only qualified bidder that wanted to keep parts of the company going. Without such a bidder, the company’s assets would have been liquidated to pay creditors.  

This week, the prospect of a liquidation was back on the table as Armstrong Flooring filed a lawsuit against Armstrong World Industries because Armstrong World Industries was refusing to sign consents that would allow AHF Products to use the Armstrong name for its products.

In its suit, Armstrong Flooring warned that if the dispute postponed closing the sale, the postponement would trigger the need for a liquidation of Armstrong Flooring that would lead to the closure of all its locations plants and loss of all its jobs. Armstrong Flooring said that would happen because it did not have money to continue its operations past Friday.

Filings by Armstrong Flooring show that Armstrong World Industries started to push back on providing written consents for AHF Products to use the Armstrong name on June 28, but Armstrong World Industries did not file any documents in court until just before Friday morning’s hearing. In its brief, Armstrong World Industries argued that since its written consent for use of its trademarks was made a condition of sale, it didn’t need to raise a formal objection.

Judge Walrath rejected that claim, saying the company’s chance to object to the buyer using its trademarks came when she specified in her May 31 “bidding procedures order” that the buyer would assume Armstrong Flooring’s contract and licenses.

“By failing to object to the assumption and assigning of the license agreement, AWI are deemed to have consented,” Walrath said at the conclusion of Friday’s hearing. “The law is clear that any party can be deemed to have consented in the face of a court order requiring it to take action.”

Walrath also rejected a request for a stay of the ruling made by Daniel Fliman, an attorney representing Armstrong World Industries, who said the company would be appealing the decision.

But plans to appeal the ruling affecting AHF Product's use of the name had been dropped by Friday evening when the joint statement was issued that included comments from Armstrong World Industries President and CEO Vic Grizzle.

“We have been working with AHF behind the scenes to transfer the Armstrong brand license because we both have the same goals, the preservation of jobs and the growth of our companies and communities," Grizzle said. "At AWI, we are happy for the former AFI employees, particularly in Lancaster, and wish them much success within the AHF family. We trust the addition of this brand will support the continued success of AHF in the flooring industry.”

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“The older we get, the more we appreciate it,” said Wise of Armstrong Flooring as he sat recently with other retirees at Hong Kong Garden on Columbia Avenue in the Wheatland Shopping Center. The restaurant was where Armstrong Flooring employees used to fill the tables at lunchtime years ago. The retirees still meet there regularly, a testament to the enduring friendships forged among generations through work at the company.

AHF Products and Armstrong World Industries had already resolved its trademark dispute and that the sale to AHF would include the right to use the Armstrong name and trademarks on flooring in North America.

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