OH GOD: Popular discount retail chain files for Chapter 11 bankruptcy
According to THE STREET, The retail sector experienced significant bankruptcy filings in 2024, continuing the trend from the previous year. Major retail chains filing for Chapter 11 this year include mall-based clothing retailer Express and fabric and crafts store Joann, both of which remain in business post-bankruptcy.
Retail Chains Closing Their Doors
However, some retailers did not fare as well. Home improvement retailer LL Flooring, teen apparel chain Rue 21, and discount retail chain 99 Cents Only all filed for Chapter 11 bankruptcy with plans to liquidate and close all their stores.
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Restaurants Join Bankruptcy Trend
The restaurant industry also saw its share of Chapter 11 filings. Italian eatery Buca di Beppo filed on August 5, Mexican chain Rubios, owned by MRRC Holdco, filed on June 5, and seafood giant Red Lobster declared bankruptcy on May 19.
Previous Year’s Notable Filings
In the previous year, several major retail chains filed for bankruptcy, including Party City, which emerged from Chapter 11 in October 2023, and Rite Aid, which exited on September 5, 2024. Home decor retailers Bed Bath & Beyond and Tuesday Morning also filed for Chapter 11 in 2023 and subsequently liquidated their stores.
Big Lots’ Chapter 11 Filing
On September 9, 2024, Big Lots (BIG), the nation’s fourth-largest home goods retailer, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware. The company is seeking to sell its assets to Nexus Capital Management for a bid of $760 million, which includes $2.5 million in cash, debt payoff, and assumption of liabilities.
An auction is scheduled for October 18, 2024, if more than one bidder submits an offer, with a hearing to approve the sale proposed for November 4, 2024. Nexus will be entitled to a $7.5 million break-up fee and up to $1.5 million in expenses if it is not the successful buyer.
Financial Challenges and Future Plans
Big Lots, which reported general operating revenues of $4.7 billion in 2023, is also seeking $707.5 million in debtor-in-possession financing, including $35 million in new money term loans to support its financial needs during bankruptcy. The company cited several macroeconomic and industry-specific challenges as reasons for its filing, including high competition, COVID-19 disruptions, a high-interest-rate environment, and a less dependable supply chain that increased operating costs.
The retailer has faced slumping sales in recent quarters, with a 10.2% drop in sales to $1.01 billion during the first quarter and a loss of $132.3 million. CEO Bruce Thorn attributed these issues to a downturn in the economy and decreased consumer spending on high-ticket discretionary items.
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Company Overview
Established in 1967, Big Lots operates over 1,300 stores in 48 states. In July 2024, the company announced plans to close 315 stores nationwide. The bankruptcy filing comes as a necessary step to address years of declining sales and operational challenges.
