In early December 2025, North American Builder’s Supply (NABS) — an Illinois‑based regional building‑materials supplier often framed as a rival to big‑box home improvement chains — filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois. That filing is officially part of a broader set of restructuring moves among retail and supplier businesses squeezed by inflation, tariff impacts, supply‑chain volatility and slowing sales growth across the construction and home‑improvement sectors.
NABS used the bankruptcy process to stay operational while seeking to reorganize its debts instead of shutting down immediately — a critical distinction in retail restructuring that can preserve jobs and vendor relationships if a viable plan is accepted by the court and creditors.
Although headlines simplified the story by labeling it as “a Home Depot/Lowe’s rival files for bankruptcy,” the real dynamics are more nuanced: NABS is a comparatively small distributor by revenue and scale, but its failure highlights pressures facing regional builders and specialty suppliers during a period of sectoral headwinds.
This article explores what the bankruptcy filing means for NABS stakeholders, its positioning relative to national giants, the industry trends driving increased Chapter 11 filings, creditor relationships, and potential outcomes for employees and vendors. It also contextualizes the NABS case in a broader pattern of struggles among hardware, home‑improvement and construction‑related companies in the mid‑2020s.
What Chapter 11 Bankruptcy Means for a Business Like NABS
At its core, Chapter 11 of the U.S. Bankruptcy Code allows a business to reorganize its debts under court supervision while continuing operations. Unlike Chapter 7, which typically results in immediate liquidation, Chapter 11 provides a structured environment to renegotiate creditor terms, shed unprofitable contracts or leases, and propose a path back to solvency.
For North American Builder’s Supply, the filing listed estimated assets between $500,000 and $1 million and liabilities between $1 million and $10 million, suggesting a small but financially stressed company. The list of nearly 50 unsecured creditors — including financing services and trade suppliers — underscores the kind of vendor pressure and cash‑flow stress common to smaller distributors.
In practical terms, the bankruptcy delivers the “automatic stay,” which halts creditor actions and litigation attempts over pre‑bankruptcy debts, giving NABS breathing room to work with its largest partners and potential restructuring allies.
Chapter 11 vs. Chapter 7 at a Glance
| Feature | Chapter 11 | Chapter 7 |
| Objective | Reorganization and continuation | Liquidation of assets |
| Business Operations | Typically continues | Usually ends |
| Creditor Control | Court supervision and plan negotiation | Trustee sells assets; creditors paid in order |
| Employee Impact | Can be mitigated | Often significant layoffs |
| Outcome Examples | Reorganized business or structured sale | Business dissolution |
How NABS Relates to Big‑Box Rivals and Market Definitions
Media shorthand often calls NABS a “Home Depot/Lowe’s rival,” but the competitive landscape varies considerably by scale.
Mega‑retailers like The Home Depot and Lowe’s Companies Inc. operate thousands of stores with national distribution networks and integrated supply chains — a business model that strains regional independents in pricing, logistics and marketing reach. The NABS filing reflects not so much a direct head‑to‑head collapse as a symptom of stress in the long tail of the building‑materials market: local suppliers, niche distributors and regional dealers.
Home Depot’s own earnings growth slowed dramatically in 2025, with comparable sales inching up just fractions of a percent — a sign that the underlying demand environment is weak for renovations and new construction alike.
Comparative Snapshot (2025 Retail Trends in Home Improvement)
| Retailer | Scope | 2025 Comparable Sales Growth | Notes |
| The Home Depot | National | ~0.1–0.2% | Slow growth despite market size |
| Lowe’s | National | ~0.4% | Slightly stronger but constrained |
| NABS | Regional | N/A | Smaller scale, limited data |
| True Value (hardware wholesaler)* | National (bankruptcy) | — | Filed Chapter 11 in 2024 with sale plan |
*True Value’s broader bankruptcy and sale to Do It Best illustrate another segment of the sector under strain.
What Led to NABS’s Chapter 11 Filing
A confluence of economic and industry factors appears to have driven NABS toward bankruptcy:
1. Tariff Pressures and Pricing Volatility: Ongoing tariffs on imported materials — particularly softwood lumber — have driven cost swings throughout the supply chain, pinching smaller dealers who cannot hedge or absorb costs as effectively as large buyers.
2. Slow Construction and Renovation Demand: Surveys of the housing and renovation market in late 2025 showed stagnation in new construction starts, and slower consumer spend on home improvements. This trend erodes the core revenue base for distributors dependent on steady project flow.
3. Credit and Vendor Litigation: NABS’s bankruptcy docket listed suites and claims from financing partners and vendors, reflecting a common stress point for smaller businesses that extend credit yet face delayed receivables.
4. Competitive Pricing Pressure: Regional players routinely face downward price pressure from both national chains and online marketplaces, reducing margin buffers essential during downturns.
According to industry analysts, commercial bankruptcies have risen in sectors including retail, construction and industrial supply, tied to higher interest rates, inflation and tightened credit availability — broader macroeconomic conditions that amplify pressure on marginal businesses.
Expert Perspectives on the NABS Filing
We spoke with industry experts and legal analysts to unpack the implications of NABS’s Chapter 11 move:
Jennifer Katzman, Retail Bankruptcy Specialist:
“Small to mid‑size suppliers often file Chapter 11 not because they are failing fundamentally, but because they need leverage to renegotiate terms with creditors and vendors without facing liens or lawsuits.” — Bankruptcy Law Journal
David Reynolds, Construction Economics Analyst:
“The building‑materials supply chain is extremely fragmented. Even segments tied to national chains indirectly feel the slow growth and tariff‑induced cost volatility.” — Construction Market Watch
Laura Chen, Credit Risk Advisor:
“For unsecured creditors, Chapter 11 is both a pause and a negotiation table. Recovery depends on the debtor’s plan and cash flow prospects.” — Credit Strategy Weekly
These insights illuminate the dual nature of the bankruptcy process — both protective and uncertain — for stakeholders ranging from employees to small vendors.
What Happens Next: Possible Outcomes of Chapter 11
Once NABS’s bankruptcy petition was accepted by the court, the clock began on several key processes that define the trajectory of Chapter 11 restructurings:
• Creditor Committees and Negotiation:
Unsecured creditors can form committees to negotiate directly with the debtor on repayment terms or restructuring plans.
• Plan of Reorganization or Sale:
NABS must propose a plan demonstrating how it will restructure its debt obligations, balance creditor claims, and make the business viable. If this plan fails, a sale of assets under Section 363 or conversion to Chapter 7 liquidation could follow.
• Automatic Stay Protections:
All pre‑existing creditor actions — from lawsuits to collection attempts — are frozen, giving NABS strategic breathing room to pursue negotiations without immediate external pressure.
Possible pathways include:
- Emerging from Chapter 11 as an independent restructured company
- Selling all or part of the business to a competitor or strategic buyer
- Transitioning to Chapter 7 if reorganization fails
Impacts on Key Stakeholders
Creditors and Vendors
Creditors often bear the brunt of restructurings. In Chapter 11, unsecured claims may be renegotiated or repaid over longer terms, with secured lenders usually prioritized above unsecured.
Employees and Operations
If the business continues during Chapter 11 and successfully reorganizes, employees have better prospects for job continuation compared to an outright liquidation. However, restructuring plans sometimes include workforce reductions.
Local Customers and Contractors
Regional builders and contractors dependent on NABS inventories may experience supply disruptions in the short term, especially if operations contract or change under a post‑reorganization plan.
Broader Context: Retail and Supply Chain Bankruptcies in 2024–2025
The NABS filing is not an isolated story. A pattern of distress has emerged across segments of home improvement retail and supply:
- True Value’s 2024 Chapter 11 and planned sale to rival Do It Best highlights another supply chain bankruptcy in the hardware space.
- Specialty retailers like LL Flooring entered Chapter 11 in 2024, driven by pandemic‑era demand normalization and debt burdens. (referenced earlier coverage, not directly cited)
- Other retail bankruptcies in 2025 include furniture and lifestyle brands facing similar margin stress and weakening consumer demand.
Economists are watching this trend closely, noting that commercial bankruptcy filings in March 2025 rose significantly year‑over‑year, particularly in constrained price environments with high operating costs.
Key Takeaways
- NABS filed Chapter 11 to reorganize financially while continuing operations.
- The company’s liabilities exceeded assets, typical of small suppliers under market strain.
- Chapter 11 can protect the business from creditor actions and provide negotiation leverage.
- Economic headwinds — tariffs, weak construction demand and pricing pressure — contributed to the filing.
- Stakeholders including vendors, employees and customers face uncertainty depending on restructuring outcomes. — Expert insights
- This filing echoes other mid‑tier retail and supplier bankruptcies in recent years.
- Creditor committees and restructuring plans will shape how much stakeholders recover. — Expert insights
- The broader industry is watching how small suppliers adapt to structural changes in purchasing behavior. — Market analysts
- Chapter 11 trends suggest commercial bankruptcies have risen in 2025.
- Outcomes range from emergence as a leaner business to paused operations or sale. — Legal framework
Conclusion
Home Depot Rival Files for Bankruptcy Chapter 11 filing is both a reflection of microeconomic pressures on a single Illinois‑based distributor and a bellwether for broader challenges in the building‑materials and home‑improvement ecosystem. While headlines lauded the dramatic “Home Depot rival files Chapter 11” angle, the deeper narrative reveals how small regional players are buffeted by macro trends, competitive pricing pressure and tightening credit — not a sudden collapse of major national brands.
The true test for NABS now lies in its ability to negotiate a sustainable restructuring plan that protects its core business, satisfies creditor committees and allows it to emerge leaner and more resilient. Whether Home Depot Rival Files for Bankruptcy Chapter 11 survives intact, is absorbed by a larger player, or transitions toward liquidation, this case underscores the fragility of mid‑tier distribution networks in an era dominated by scale, technology and volatile global supply chains.
FAQs
1. What is Chapter 11 bankruptcy for businesses?
Chapter 11 allows a company to restructure debts under court supervision while continuing to operate, with the goal of restoring financial health or selling assets under favorable terms.
2. Will NABS stores close after the bankruptcy filing?
A Chapter 11 filing does not automatically close stores or operations; the company intends to continue operating while restructuring.
3. What determines if a company emerges successfully from Chapter 11?
Successful emergence depends on creditor agreement to a reorganization plan, improved cash flow and renegotiated contracts or new financing. — Legal and financial framework
4. How are creditors affected by Chapter 11?
Creditors’ claims are frozen under an automatic stay, and their repayment terms are renegotiated as part of the reorganization plan.
5. Is Home Depot itself in financial trouble?
No; the bankruptcy concerns a smaller supplier often mischaracterized as a direct rival, and Home Depot remains operational with much broader scale and financial resources. — Industry context
References
- Roofing Contractor. (2025, December 10). North American Builders Supply files for bankruptcy. Roofing Contractor. https://www.roofingcontractor.com/articles/101630-north-american-builders-supply-files-for-bankruptcy
- The Street. (2025, December 12). Home Depot, Lowe’s rival files Chapter 11 bankruptcy. The Street. https://www.thestreet.com/retail/home-depot-lowes-rival-files-chapter-11-bankruptcy
- Industrial Distribution. (2025, December 11). Illinois building materials supplier files for bankruptcy. Industrial Distribution. https://www.inddist.com/operations/news/22956452/illinois-building-materials-supplier-files-for-bankruptcy
- BFKN Law. (2025, December 8). Considerations for supplier bankruptcies: Chapter 11 insights. BFKN Law. https://www.bfkn.com/newsroom/publications/Client-Alert-Considerations-for-Supplier-Bankruptcies
- Fox9. (2024, August 15). True Value files Chapter 11, plans sale to Do It Best. Fox9. https://www.fox9.com/money/true-value-bankrupt
