The retail sector suffered more significant bankruptcy filings in 2024 after facing several notable Chapter 11 cases in the previous year.
Some big-name retail chains that filed Chapter 11 this year and continue in business include mall-based clothing retail chain Express and fabric and crafts store Joann.
Related: Major shipping company shuts down; no bankruptcy filing yet
Retailers that weren’t as successful in bankruptcy included home improvement retailer LL Flooring, teen apparel chain Rue 21, and discount retail chain 99 Cents Only, which all filed Chapter 11 bankruptcy in 2024 with plans to liquidate and close all of their stores.
Several restaurant chains joined these retail chains in Chapter 11 to reorganize their businesses, as Italian eatery Buca di Beppo filed on Aug. 5, Mexican chain Rubios owned by MRRC Holdco filed on June 5 and seafood giant Red Lobster declared bankruptcy on May 19.
The previous year also featured major retail chains filing bankruptcy, including Party City, which emerged from Chapter 11 in October 2023 and Rite Aid finally exiting on Sept. 5, 2024. Home decor retailers Bed Bath & Beyond and Tuesday Morning filed for Chapter 11 in 2023 and both liquidated their brick-and-mortar locations.
Big Lots has files for Chapter 11 protection and will sell its assets.
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Big Lots to sell its assets in Chapter 11
Finally, popular discount home goods retail chain Big Lots (BIG) on Sept. 9 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware seeking a sale of its assets to its stalking-horse bidder Nexus Capital Management for a $760 million bid, which includes $2.5 million in cash, debt payoff, and assumption of liabilities.
Related: Mattress Firm rival files for Chapter 11 bankruptcy
An auction will be held on Oct. 18 if more than one bidder submits an offer, with a hearing to approve a sale proposed for Nov. 4, according to the debtor’s bidding procedures motion.
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 at an auction.
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Big Lots, the nation’s fourth largest home goods retailer with 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 meet the debtor’s financial needs during the bankruptcy process.
The Columbus, Ohio, debtor said several significant macroeconomic and industrial-specific headwinds including high competition, Covid-19 disruption, a high interest rate environment, and a less dependable supply chain that increased operating costs were the reasons the company needed to file bankruptcy, Big Lots chief financial officer Jonathan Ramsden said in a Sept. 9 declaration.
The bankruptcy filing and sale are necessary for the company after years of slumping sales. The company in Securities and Exchange Commission filings has blamed elevated inflation for adversely impacting its customers’ buying power. Big Lots had claimed its core consumers were hesitant to purchase big-ticket discretionary items.
Big Lots has struggled in recent quarters. CEO Bruce Thorn said a downturned economy had soured customers and hurt profits. The company had a 10.2% drop in sales to $1.01 billion during the first quarter and a loss of $132.3 million.
“While we made substantial progress on improving our business operations in Q1, we missed our sales goals due largely to a continued pullback in consumer spending by our core customers, particularly in high ticket discretionary items,” Thorn said.
Big Lots in its petition listed $1 billion to $10 billion in assets and liabilities. Its debts include $556.1 million in funded debt obligations that consist of a $433.6 million asset-based lending facility and a $122.5 million term loan.
The discount home goods retailer was established in 1967 and operates over 1,300 stores in 48 states. The debtor in July revealed that it planned to close 315 stores nationwide.
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