Bed Bath & Beyond, which has been weighed by losses, has filed for Chapter 11 bankruptcy protection after a turnaround plan failed to keep the business running.
The Union, New Jersey-based filed the voluntary Chapter 11 petition on Sunday in the US Bankruptcy Court in Newark. It also issued a statement saying Bed Bath & Beyond and buybuy BABY Stores and websites are open and serving customers as wind-down starts.
It expects to close all of its 360 Bed Bath & Beyond and 120 Buybuy Baby retail locations eventually. No time frame was disclosed.
Bed Bath & Beyond said that in order to facilitate the winding down process, it has received a commitment of $240 million in debtor-in-possession financing (DIP) from its top lender Sixth Street Specialty Lending Inc.
According to the Wall Street Journal bankruptcy gives Bed Bath & Beyond the “breathing room to conduct going-out-of-business sales at its physical stores and solicit interest from potential buyers for its remaining assets, such as its branding.”
The Journal noted that individual investors who continued to back Bed Bath & Beyond during its final months will likely be wiped out as Chapter 11 proceedings prioritize the repayment of debt over shareholder recoveries.
The only hope for retail investors is if a bidder emerges for the business in bankruptcy. Bed Bath said it would pivot away from its liquidation plans to pursue a sale in such a scenario.
"Millions of customers have trusted us through the most important milestones in their lives – from going to college to getting married, settling into a new home to having a baby,” said Bed Bath & Beyond CEO Sue Gove in a statement.
“We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process.”
The beleaguered home goods retailer warned of a potential bankruptcy in early January when it issued a “going concern” notice.
The giant retailer sells a wide assortment of merchandise aimed at the home and baby markets in the US, Canada and Mexico.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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