Bed Bath & Beyond bankruptcy filing, retail closure and liquidation sale underway

24 Apr 2023 --- Bed Bath & Beyond and 73 affiliated debtors have voluntarily filed for Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey. The business intends to “wind down” by liquidating its assets through a limited sale and marketing process.

Meanwhile, 360 Bed Bath & Beyond and buybuy Baby stores and websites remain open as the wind down commences. The hearing on the Debtors’ First Day Motions is being held today.

Upholding promises
To facilitate the winding down process, the company has received a commitment of approximately US$240 million in debtor-in-possession financing from Sixth Street Specialty Lending. The company believes the funding will provide the necessary liquidity to support operations during the Chapter 11 process.

“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. Our teams have worked with an incredible purpose to support and strengthen our beloved banners, Bed Bath & Beyond and buybuy Baby,” says Gove.

“We deeply appreciate our associates, customers, partners and the communities we serve, and we remain steadfastly determined to serve them throughout this process. We will continue working diligently to maximize value for the benefit of all stakeholders.”

The company intends to uphold its promises to partners of maintaining customer programs, customers and employee wages and benefits.

Auctioning off assets
Bed Bath & Beyond will commence a limited sale and marketing process for some or all of its assets.The company has received a commitment of approximately US$240 million in debtor-in-possession financing.

“The Company has filed motions with the Court seeking authority to market Bed Bath & Beyond and buybuy Baby as part of an auction pursuant to section 363 of the Bankruptcy Code,” shares the company.

“Alongside these efforts, the Company is also strategically managing inventory to preserve value.”

If the sale is successful, the company will “pivot away from any store closings needed to implement a transaction. The company believes this dual-path process will best maximize value.”

Timeline this year
Early this year, Bed Bath & Beyond’s layoffs were announced as the personal care and home amenities giant made moves to offset declining sales by cutting costs. The company had been consulting its advisors to stave off the threat of bankruptcy; however, it conceded this option was not off the table.

The group has been financially struggling with “significant net losses since 2018,” it says, explaining that it experienced “dramatic declines in revenue” due to the COVID-19 pandemic and worldwide economic downturn caused by supply chain disruptions and persistent inflation.

However, Bed Bath & Beyond completed a public equity offering in February to save its US-based operations. It received initial gross proceeds of approximately US$225 million, with an additional US$800 million in future installments. This was planned to repay outstanding borrowings under its credit facility.

Following this in March, Sue Gove, president and CEO at Bed Bath & Beyond, said: “The actions we’ve taken have enabled us to create the necessary financial runway to begin restoring our iconic Bed Bath & Beyond and buybuy Baby businesses.”

“We have raised US$360 million of equity capital since the beginning of February, cured our default under our credit agreement, repaid material amounts of our ABL facility, and completed our interest payment for our Senior Notes, all while jumpstarting our turnaround plans.”

Moreover, the company revealed preliminary financial results for the fiscal 2022 fourth quarter (ended February 25, 2023) with net sales of US$1.2 billion and year-over-year sales decline in the 40-50% range. The continuation of negative operating losses was also reported.

By Venya Patel

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