Bed Bath & Beyond filed for Chapter 11 bankruptcy protection on Sunday (Apr 23) after the home goods retailer failed to secure funds to stay afloat, and has begun a liquidation sale.
The home goods retailer, which shot to popularity in the 1990s as a go-to shopping destination for couples making wedding registries and planning for new babies, has seen demand drop off in recent years as its merchandising strategy to sell more store-branded products flopped.
Last year’s moves to abandon that strategy, and to bring in more national brands that shoppers recognise, had not shown signs of working, with the company reporting a loss of about US$393 million after sales plunged 33 per cent for the quarter ending Nov 26.
The Union, New Jersey-based retailer filed for bankruptcy in a District of New Jersey court, listing both its estimated assets and liabilities in the range of US$1 billion and US$10 billion, according to a court filing.
The company said that it has received a commitment of about US$240 million in debtor-in-possession financing from Sixth Street Specialty Lending, according to a statement.
While the retailer has begun a liquidation sale, it intends to use the Chapter 11 proceedings to conduct a limited sale and marketing process for some or all of its assets, according to the statement.
The company added that its 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue serving customers as it starts efforts to effect the closure of its retail locations.
In January, the company raised doubts about its ability to continue as a going concern just months after it announced more than US$500 million in new financing, as well as job cuts and 150 store closures.
In February, the embattled retailer had planned to raise about US$1 billion through the offering of preferred stock and warrants to avoid bankruptcy.
The company was able to raise US$360 million from the complex deal helping it pay loan defaults and interest payments for senior notes.
But Bed Bath terminated the deal in late March and announced plans to sell US$300 million worth of its shares, warning it might have to file for bankruptcy if it could not secure the funds.
In February, according to a court filing, Bed Bath & Beyond’s Canadian operations were going out of business. The Canadian division, which operates 54 Bed Bath & Beyond stores and 11 buybuy BABY stores, is insolvent, the filing posted on the website of consultancy Alvarez & Marsal showed.