Major retail chains had a rough year in 2023, as several big name firms filed for bankruptcy, including Rite Aid, Bed Bath & Beyond, Party City, and Tuesday Morning.
Party City successfully emerged from bankruptcy in October 2023, just in time for Halloween, to continue as a going concern. Rite Aid is very close to emerging from bankruptcy after getting court approval of its reorganization plan.
Related: Another popular ice cream brand files for Chapter 11 bankruptcy
Bed Bath & Beyond and Tuesday Morning were not so lucky as both retailers liquidated their stores in 2023. But Overstock.com purchased Bed Bath & Beyond’s brand and intellectual property, merged the companies as Beyond and it now operates online at Bedbathandbeyond.com.
Big name retail chains have also filed for Chapter 11 bankruptcy in 2024. Fabric and crafts store Joann filed Chapter 11 in March, and teen apparel retail chain Rue 21 filed bankruptcy and liquidated in May 2024. Discount retail chain 99 Cents Only in April filed for Chapter 11 bankruptcy and liquidated, as well.
Mall-based clothing retail chain Express in May filed for Chapter 11 bankruptcy and has survived after closing about 95 of its stores, and Home Depot rival LL Flooring on Aug. 11 filed for Chapter 11 seeking a sale of its assets.
Related: Struggling Home Depot rival files for Chapter 11 bankruptcy
Finally, discount home goods retail chain Big Lots (BIG) is considering a potential bankruptcy filing after years of slumping sales, people with knowledge of the company’s plans told Bloomberg.
Big Lots may soon file for Chapter 11 bankruptcy.
Image source: Shutterstock
Big Lots seeking investors to avoid bankruptcy
Big Lots is also seeking investors to pump capital into the company to avoid filing Chapter 11 bankruptcy, a person familiar with the situation said. Earlier this year, the retail chain secured a loan to address its liquidity shortfall.
More bankruptcy stories:
Popular Italian restaurant chain files for Chapter 11 bankruptcyHuge shipping company files Chapter 11 bankruptcy to liquidateLuxury apparel brand files for Chapter 11 bankruptcy
The talk of a possible Chapter 11 filing is probably more than a rumor as the company’s board of directors on Aug. 12 approved one-time cash retention awards totaling $5.24 million to four top executives, according to a Securities and Exchange Commission Form 8-K. Offering retention bonuses is a common practice before a company files bankruptcy.
The one-time bonuses included $3.15 million for CEO Bruce K. Thorn, $969,938 for Chief Financial and Administrative Officer Jonathan A. Ramsden, and $561,068 each for Chief Legal and Governance Officer Ronald A. Robins Jr. and Chief Human Relations Officer Michael A. Schlonsky.
Whenever credible rumors begin circulating that a public company might file bankruptcy, you can bet that stock will begin to plummet.
And a stock plummeting on bankruptcy rumors can lead to trading being halted.
That’s what happened with WeWork, the provider of coworking spaces, back in November 2023 after the Wall Street Journal reported that the company was planning to file for Chapter 11 bankruptcy.
WeWork’s stock plummeted by 66%, from $2.52 to a low of 82 cents, including a 46% drop after the Journal report, according to Forbes. WeWork filed for Chapter 11 bankruptcy on Nov. 6, 2023.
In Big Lots’ situation, trading on the company’s stock has not been halted, but shares on Aug. 28 fell by about 14% in after-hours trading to 80 cents at last check after Bloomberg reported that the company was planning to file bankruptcy. The stock had somewhat recovered after falling by about 25% in earlier after-hours trading.
Related: Veteran fund manager sees world of pain coming for stocks
