Bed Bath & Beyond Files for Chapter 11, Closing Stores

Bed Bath & Beyond announced yesterday that it has filed for bankruptcy under Chapter 11 to close its business and seek a sale of its assets. The home goods retailer has received a commitment of approximately $240 million in debtor-in-possession financing from Sixth Street Specialty Lending to facilitate the store closing process, pending court approval.

Bed Bath & Beyond’s 360 namesake stores and 120 Buybuy Baby locations and their websites will remain open as part of the liquidation process. The retailer said it would meet its commitments to customers, employees and vendors by honoring gift cards, paying wages and benefits, and honoring its obligations to its trading partners.

The company also said it “will pivot away from any store closings” should a bidder or bidders arise during the bankruptcy process. Bed Bath & Beyond leadership “believes this dual-path process will best maximize value.”

Total Retail's Take: Bed Bath & Beyond’s plans to seek a sale of some or all of its assets under Chapter 11 is not a surprise. It has been widely speculated that the Union, New Jersey-based retailer would need a new owner to keep its business going after it issued a business update in January that said “recurring losses and negative cash flow” raise “substantial doubt” about its “ability to continue as a going concern.” Then, in late January, it announced that it was closing all of its Harmon Face Value stores and hundreds of its namesake stores. Experts point to weak operations and a lack of cash as the primary reasons for Bed Bath & Beyond's demise.

"Bed Bath & Beyond’s [bankruptcy] is due to the company’s ongoing weak operations and cash drain," said David Silverman, senior director, Fitch Ratings, in an emailed statement to Total Retail. "The company’s limited chances for a turnaround have left it unable to find financing sources to support the company on an ongoing basis until sales and cash flow improve."