Kelly-Moore Paints, a longstanding company in the paint industry, went out of business due to a combination of financial burdens and legal challenges. The primary factor contributing to the company's closure is the substantial financial strain from settling asbestos-related legal claims. Kelly-Moore has spent $600 million on these settlements, which began getting filed in the late 1990s and early 2000s. Additionally, the company faces an estimated $170 million in future litigation related to similar claims.
The presence of asbestos in various Kelly-Moore products, including bedding cement, Deco-Tex ceiling texture, and several types of joint compounds, has led to numerous lawsuits over the years. Asbestos was commonly used in many building materials throughout the mid-20th century but is now known to be a significant health hazard linked to diseases such as mesothelioma. Although Kelly-Moore ceased using asbestos in its products by 1981, and the federal government banned its use in 1989, the company continues to face litigation for past exposures.
In addition to the asbestos-related expenses, Kelly-Moore also had liabilities concerning unpaid sales and use taxes, though the exact amount has not been disclosed. These financial challenges were further compounded when no new funding materialized after the company furloughed 700 employees earlier in the year.
The decision to close down was made after evaluating all other potentially feasible options, with the company concluding that neither a bankruptcy reorganization nor an in-court liquidation was viable or advantageous given its inability to fund continued operations. This decision results in the shuttering of more than 150 stores and the loss of jobs for over 1,000 employees.
Kelly-Moore's closure marks the end of an era for a brand that was founded in 1946 and had grown to become a significant player in the West Coast paint market. Competitors are now looking to fill the void left by Kelly-Moore's exit, with some actively recruiting laid-off employees and considering taking over store leases.
