Chapter 11 Bankruptcy
The company will be filing bankruptcy proceedings under Chapter 11.
Source: @WAVY_News/X
Chapter 11 bankruptcy is used by companies that need to completely restructure their business while still paying back debtors at a reduced rate.
Assets and Liabilities
Big Lots was forced to publicly list its assets and liabilities to support the bankruptcy claim.
Source: @thecoopertom/X
The company notes that the assets and liabilities sit in the range of $1 billion to $10 billion, and between 5,000 and 10,000 creditors they currently cannot pay off.
Nexus Capital
The company buying out Big Lots is Nexus Capital Management LP.
Source: Vlada Karpovich/Pexels
The company says that ir provides debt advisory services and traditional commercial broker solutions to retail, industrial, and childcare industries.
Nexus Saving the Brand
Nexus will act as a “stalking horse bidder” in the court-supervised action process.
Source: Freepik
The deal will close in the fourth quarter of 2024 if Nexus is the final bidding winner. A stalking horse bid is a starting or minimally accepted offer that other interested bidders must surpass if they want to buy the asset or the whole company.
Big Lots
Big Lots is a retailer with roughly 1,400 stores around the U.S. and a large online commerce platform.
Source: @Houstonomics/X
The company employs more than 30,000 workers and has been grappling with declining sales over the past few quarters.
Other Furniture Stores Are in Trouble
Last month, Badock Home Furniture & More was forced to close 380 US stores due to failing revenues and a lack of in-person sales.
Source: @FIRMANPower/X
The parent company, Conn’s went bankrupt in order to raise more liquid cash for the company and keep a select number of Conn’s Home Plus locations open.
Retail Is In a Slump
Part of the issues that many home furnishing stores are facing is the tight competition with ultra-cheap and more convenient online retailers like Amazon and Ikea.
Source: Albero Furniture Bratislava/Unsplash
Since the boom in online shopping, traditional retailers have struggled to keep up with the changes.
Other US Retailers Are Failing
In-person furniture stores aren’t the only sector that has been failing to keep up lately.
Facade with sign at Amazon Books retail store on Santana Row in the Silicon Valley, San Jose, California, December 14, 2019. (Photo by Smith Collection/Gado/Getty Images)
In the past year, retail sales have fallen substantially in the US. With the current economic market, people just aren’t spending the same on luxury items as they used to.
Big Lots Issues a Press Release
Big Lots CEO Bruce Thorn said, “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.”
Source: @ABC7NY/X
During the process, its locations and websites will remain open for shopping until the company can make a final decision about the fate of the store.
Several Economic Factors To Blame
Big Lots blamed a number of economic factors for the bankruptcy proceedings.
Source: Freepik
The company cites issues with high inflation and interest rates as a reason why customers have been changing their spending habits. Big Lots says that customers seek value – not necessarily low costs for their money.
More Store Closures Could Be Coming
“The prevailing economic trends have been particularly challenging to Big Lots, as its core customers curbed their discretionary spending on the home and seasonal product categories that represent a significant portion of the company’s revenue,” it explained.
Source: @TurboLeaks/X
Roughly 300 of its 1,400 locations will be closed across the United States. On Monday, more store closures are expected to be announced, but the company will “need to close certain locations to ensure that our business operates efficiently and we can continue serving our customers.”