Inside Air Pros’ bankruptcy filing

HVAC platform Air Pros on Sunday filed for Chapter 11 bankruptcy protection in the Northern District of Georgia, as part of a year-long restructuring effort, according to public court records.

Why it matters: The filing marks the first Chapter 11 bankruptcy for a large-scale, private equity-backed home services platform formed in recent years. 

What’s happening: In conjunction with the filing, Air Pros on Monday announced that it’s selling all of its businesses via six separate purchase agreements. 

• To support itself through the sales processes, it secured $20 million in financing from its current lender, $4 million of which will be made available immediately — the company faces a total debt burden exceeding $250 million. 
• “After conducting an extensive review… the company determined that these transactions represent the best path forward and are in the best interests of all customers, employees, and other stakeholders,” said Andrew Hede, Air Pros’ Chief Restructuring Officer. 

Of note: The company on Tuesday night filed a motion disclosing the “stalking horse bidders” — lead potential buyers — for each of the six purchase agreements, which total $156 million.

• Bidders include Any Hour Group, Columbia Home Services, and several entities with names similar to the locations they’ve bid on, suggesting possible involvement from existing leadership. 
• Apex Service Partners appears as a “buyer” in the filing, though which specific purchase agreement it’s connected to remains unclear.
• Details (Page 12)

Zoom out: Founded in 2017 in Florida by Anthony Perera, Air Pros started as a single branch and expanded throughout the state by opening additional Air Pros locations and acquiring other Florida-based HVAC businesses.

• Over the following years, the company continued making acquisitions, including Doug’s Service Company, Hansen Super Techs, and Dream Team Heating & Air, establishing a presence in eight states nationwide. 
• Today, Air Pros counts over 700 employees and 600 trucks across its portfolio of 11 brands plus the Air Pros locations.
• According to an investor document obtained by Homepros, the company was generating roughly $25 million of annualized EBITDA as of 2024 — though that estimate hasn’t been publicly confirmed. 

Follow the money: After a 15-month acquisition streak, the company ran into several challenges. “Many of the operating practices of the legacy Air Pros business have not been applied to acquired business units,” writes Andrew Hede. 

• “[E]ach business unit has an individualized operating model, which leads to lack of controls, different operating philosophies and margins, and a lack of economies of scale,” he adds. “Combined with other challenges, the businesses have underperformed.”

The company also took on a meaningful amount of debt. “[Air Pros’] level of indebtedness has made it more difficult to satisfy [its] obligations, resulting in defaults on, and acceleration of, such indebtedness,” Hede continues. 

• “[D]edicating a substantial portion of its cash flows from operations to debt service obligations has reduced the availability of such cash flows… to fully integrate the acquired business units, fund capital expenditures… and to carry out other aspects of its business,” he says.

As the challenges mounted, Air Pros in July 2023 tapped investment bank Jefferies to initiate a sale process, though nothing materialized. 

• In January 2024, a lender removed Perera as the holding company’s manager following “certain events of default.” 
• Restructuring veteran Lawrence Hirsh stepped in as a replacement, followed by Hede as Chief Restructuring Officer in September 2024.
• Perera officially resigned in October, and after an internal evaluation determined that a break-up sale was the best path forward, the company re-engaged Jefferies to market the process.

“I was not involved in the board’s decision to seek this relief. Personally, I’m disappointed as the company has a long track record of success, and each business line was profitable,” Perera wrote in an email forwarded to Homepros.

What’s next: While the stalking horse bidders have set initial prices, “These proposed transactions are subject to higher or otherwise better bids, Bankruptcy Court approval, and other conditions,” the announcement notes. 

• According to the filing, new bids are due on May 5, with a target closing date of June 16. 
• In the meantime, all of its branches will remain operational. 
• Representatives for Air Pros and Jefferies didn’t respond to requests for comment.