A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York on Friday, January 6, 2023.
Johnny Milan | Bloomberg | Getty Images
Bed Bath & Beyond filed for Chapter 11 bankruptcy on Sunday after a series of last-ditch efforts to raise enough equity to keep the business alive failed at the eleventh hour.
The struggling home goods retailer has been warning of potential bankruptcy since early January, when it issued a ‘going concern’ notice that it may not have the cash to cover expenses after a dismal holiday season.
“Bed Bath & Beyond Inc. today announced that it and certain of its subsidiaries have filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of New Jersey to enforce is implementing an orderly liquidation of its business while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets,” a statement said on Sunday.
“The company’s 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue to serve customers as the company begins its efforts to effect the closure of its outlets.”
Bed Bath has been hanging by a thread since but refused to go down without a fight. In early February, he secured what was then believed to be a Hail Mary stock offering which was to inject over $1 billion in equity into Bed Bath, but the plan fell through and yielded only 360 million, the company said.
In late March, Bed Bath announced another stock offering which it hoped would raise $300 million, but this news sent the stock price plummeting and it struggled to raise the funds it needed. hoped the offer would provide. As of April 10, the company has sold about 100.1 million shares and raised just $48.5 million.
In filings, the company warned that if it did not collect the expected proceeds from the offering, it would likely have to file for bankruptcy.
Days after the announcement of the second share offering, Bed Bath said it had teamed up with liquidator Hilco Global to boost its inventory levels. Under the deal, Hilco subsidiary ReStore Capital agreed to buy up to $120 million worth of goods from the company’s major suppliers after relations with Bed Bath suppliers soured. due to its liquidity problems.
However, the plans ultimately proved fruitless and weren’t enough to keep the lights on.
The retailer has struggled to maintain relationships with its suppliers and has struggled with low inventory levels, lagging sales and rapidly shrinking cash.
As the holiday season approached, Bed Bath was struggling to keep its shelves stocked and due to its liquidity issues, some sellers began asking for prepayments, the company said in the filings.
CEO Sue Grove had led the company in a turnaround attempt that she hoped could save the company, but those efforts coincided with high inflation that hurt consumer spending while rising interest rates interest has slowed the housing market.
Additionally, consumers who had spent 2020 and 2021 staying home and updating their living spaces amid the pandemic were now spending on travel, dining out and other out-of-home experiences.
By mid-January, the company was looking to find a buyer willing to keep it afloat with a cash injection. Soon, however, Bed Bath revealed in a securities filing that he did not have enough cash to pay his debts and had defaulted on his line of credit with JPMorgan.
The company was able to make its interest payments using funding secured from the first share offering, but at the time warned it would “probably” have to file for bankruptcy and have its assets liquidated if the The deal was not going as planned.
The company had loans with JPMorgan and lender Sixth Street that were reduced in late March after it announced its second share offering. At the time, its total revolving commitment was reduced from $565 million to $300 million and its revolving credit facility was reduced from $225 million to $175 million. Under the reduced credit agreements, Bed Bath had to pay monthly interest.
The company said it was trying to cut costs by cutting capital expenditures, closing stores and negotiating leases, but warned in documents that the efforts “may not be successful”.
At a popular Bed Bath outpost in New York City, a since-fired staff member recently told CNBC that workers stood there unsure of what to do after the company suddenly halted in-store pickup and deliveries on place. The worker was told that the liquidators would come the next day and quickly learned that the employees would not receive severance pay after more than two decades with the company.
“It was so fast,” the worker said.