Big Lots has filed for Chapter 11 bankruptcy protection due to a decline in consumer spending and soft sales.
The company attributed the challenges to high inflation and interest rates impacting consumer behavior in purchasing home and seasonal products.
The big picture: Big Lots plans to sell its assets and ongoing business operations to a private equity firm, Nexus Capital Management, as part of the bankruptcy reorganization strategy to address financial difficulties caused by a prolonged drop in sales.
- Big Lots intends to continue regular operations by selling products at its stores and online during the court-supervised sale process, although it plans to shut down some stores without specifying the locations or number affected, having nearly 1,400 stores across 48 states as of the end of 2023.
- A court-supervised auction will involve Nexus Capital as the “stalking horse” bidder, with the potential sale subject to other competitive offers or bids.
- If Nexus Capital emerges as the winning bidder, the deal is anticipated to be finalized in the fourth quarter pending court approval.
- Big Lots has secured financing commitments totaling $707.5 million, including $35 million in new funding from existing lenders, aimed at providing liquidity to support ongoing operations and the sale process in collaboration with Nexus Capital.
- Notably, Big Lots received a notice from the New York Stock Exchange regarding its stock price falling below $1 over 30 consecutive trading days, triggering a non-immediate delisting possibility, which the company can appeal, as reflected in premarket share price decline by 40% to 30 cents.
What they’re saying: “The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value,” said Big Lots President and CEO Bruce Thorn in a statement.
