[Economics] Bed, Bath & Beyond files for bankruptcy

[#Wittels-]

The home and decoration company has a debt of 5,200 million dollars

The home and decoration chain Bed, Bath & Beyond has declared bankruptcy this Sunday, as announced through its website. The company founded in 1971 in New Jersey and which was among the favorites for wedding lists and for those who became independent and set up a new house, has failed in its attempts to right the course after years of problems.

Thank you to all our loyal customers. We have made the difficult decision to start dismantling our operations. Bed Bath & Beyond and Buy Buy Baby stores and websites are open and serving customers. The group has some 360 stores of the main chain and another 120 of Buy Buy Baby, which will gradually close. It has obtained financing of 240 million dollars from the firm Sixth Street Specialty Lending to continue operating. 

 

The company has indicated in a statement that the process will involve "carrying out an orderly liquidation of its businesses, while carrying out a limited placement process to request interest in one or more sales of some or all of its assets." It will be a dual process. On the one hand, closing stores and liquidating inventory and, on the other, looking for a buyer for the business. If he finds it, he would stop closing establishments. “The company believes that this two-way process will maximize value,” he says.

Bed, Bath & Beyond calculates that at the end of November it had assets amounting to 4,401 million dollars (about 4,000 million euros) and a total debt of 5,200 million dollars, according to the documentation presented to the New Jersey courts. The number of creditors ranges from 25,001 to 50,000. The largest unsecured creditor is BNY Mellon with $1.185 billion, far behind the next, Personalization Mall, with $11 million. A total of 73 different companies have filed for bankruptcy. Bed Bath & Beyond's chief financial officer, Holly Etlin, will act as director of restructuring to manage the bankruptcy.

It has been a sung crisis. Bed Bath & Beyond has been on the verge of bankruptcy for more than a year due to its financial problems, aggravated by the pandemic, trade, changes in consumer habits, high inflation and electronic economic uncertainty. The company did not know how to adapt and its proposal was less and less convincing to customers. Its fall is a symptom of a broader crisis affecting retail as a whole.

The e-commerce coup and management woes swept Circuit City and Linens 'n Things years ago and put Sears and Toys R Us on the ropes. Early in the pandemic, firms like JC Penney, Neiman Marcus and J. Crew went bankrupt. The largest bridal gown chain, David's Bridal, filed for bankruptcy last week, though it continues to operate.

Sue Gove, President and CEO, has made an epitaph-sounding statement: “Millions of customers have entrusted us with the most important moments of their lives, from going to university to getting married, moving to a new home or having a baby. . . Our teams have worked with incredible purpose to support and strengthen our beloved brands, Bed Bath & Beyond and Buy Buy Baby. We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfast in serving you throughout this process. We will continue to work diligently to maximize value for the benefit of all stakeholders," he said in the statement.

Bed, Bath & Beyond launched a cutback plan last year that led to the closure of 150 stores and the dismissal of 20% of the workforce. It then warned of the uncertainty of continuing as a going concern and earlier this year acknowledged that it had stopped meeting its financial obligations. Its crisis was tragically marked last year by the suicide of its financial director. In recent months it had tried to avoid suspension of payments with an agreement with a fund and with the issuance of new shares that it has been placing on the Stock Market.

 

None of those attempts have been successful. He had entered a vicious circle. The entities did not give him credit, some suppliers demanded advance payment and this has led to the company having less than the appropriate merchandise. The collapse in sales makes it impossible to generate cash and meet financial obligations, which generates more mistrust and starting over.

The company began to default on its financial obligations on January 13. That month, he received a notification of debt acceleration and late-payment interest from JPMorgan Chase Bank, as the agent bank of his credit agreement resulting in non-payment. This requires that the principal amount of all loans outstanding under the lines of credit, together with interest earned thereon, other premiums and obligations, be due and payable immediately.

The company received a rescue proposal from the high-risk fund Hudson Bay Capital Management that was supposed to provide financing for a maximum of 1,000 million, but the agreement did not become effective due to breaching some of the conditions. The company's latest flight forward has consisted of placing newly issued shares on the market. It was a high-risk bet for the subscribers, since if the capital was not sufficiently increased, bankruptcy was foreseeable and the titles would lose almost all their value. The price has plummeted 98% in the last year, down to 29 cents per share.

 

Link: https://elpais.com/economia/2023-04-23/bed-bath-beyond-entra-en-bancarrota.html