Highlights:

  • In a long anticipated move, Bed Bath & Beyond has filed for Chapter 11 protection at the U.S. Bankruptcy Court for the District of New Jersey, per court documents and a company press release.
  • The retailer said it anticipates closing all of its stores by June 30.
  • The struggling home goods retailer said it has a commitment for $240 million in debtor-in-possession loans to finance its operations. The company has $1.8 billion in long-term debt, per court documents.
  • However, though it is still looking for a buyer, the DIP financing will most likely facilitate an orderly wind-down of its namesake and BuyBuy Baby businesses. The company has worked to sell itself since 2022, to no avail, chief financial officer and chief restructuring officer Holly Etlin said in a filing.
  • Bed Bath & Beyond is seeking court permission to pay up to $17 million to vendors including merchandise suppliers, warehousers, trucking companies and parcel carriers.
  • The $17 million figure is the company’s estimate on what it owes on “critical” lien claims by vendors as of its Chapter 11 filing, or in the interim before a final hearing takes place. 
  • In a court filing, Bed Bath & Beyond said the balances to vendors need to be paid to ensure uninterrupted service as it looks to wind down its business and sell off its remaining assets in bankruptcy in the coming months.

Even as it looks to close shop, Bed Bath & Beyond needs the support of its supplier base and logistics providers. That is mainly so that it can wind down smoothly, get the most out of its store closing sales and preserve what value is left in its assets, including its brand property. As the company put it, Bed Bath & Beyond “can ill-afford severe disruption to their flow of Merchandise at this critical juncture” in Chapter 11. 

In some cases, the retailer’s analysis found that the value of certain products and services to the company and its stakeholders “far outweighs the cost of payment of the claim,” making repayment all the more crucial.

Overall, though, Bed Bath & Beyond is being strategic about who it pays and how much. The retailer said it is only planning to pay “undisputed and valid prepetition Critical Lien Claims that are necessary and critical” to preserve the value of its assets. Bed Bath & Beyond will also, where it can, condition payment on a vendor continuing to ship to or service the retailer.

Along with the merchandise and service, Bed Bath & Beyond said that vendors that provide it with “reasonable trade terms” in bankruptcy create “considerable liquidity” for the company, which it needs even now after filing.

Deteriorating supplier relationships played a significant role in the retailer’s journey into bankruptcy. Its sales in recent quarters have plummeted as suppliers tightened up their payment terms, and the retailer lacked the cash to fully stock its shelves. 

In recent weeks, Bed Bath & Beyond launched a consignment program in an attempt to bring in more inventory, but the program obviously wasn’t enough to keep the company out of bankruptcy court.

Prioritizing repayment of certain claims in a bankruptcy typically requires court approval, as creditors and stakeholders jockey for their place in the repayment line. Bed Bath & Beyond requested a final hearing on the critical lienholder payments within 28 days of its filing.

According to the terms of its bankruptcy financing package, Bed Bath & Beyond has 90 days to complete the liquidation of its stores. 

Source: Retail Drive
Source: Retail Drive
Source: Home Page News
Source: The Star