Bed Bath & Beyond can’t pay creditors, bankruptcy looms

Bed Bath & Beyond edged nearer to bankruptcy with a dire monetary disclosure. The domestic merchandise retailer introduced Thursday that it can’t pay debt that immediately got here due when credit score administrator JPMorgan slapped the corporate with a discover of default and acceleration of fee. 

“At this time, the corporate doesn’t have ample assets to repay the quantities below the credit score services and this may lead the corporate to contemplate all strategic alternate options, together with restructuring its debt below the U.S. Bankruptcy Code,” Bed Bath & Beyond stated in a delayed quarterly filing with the Securities and Exchange Commission.

The firm additionally added restructuring knowledgeable Carol Flaton to its board as an impartial director, efficient instantly. Flaton serves as an impartial director of Talen Energy Supply. According to the biography posted on that firm’s web site, Flaton beforehand served as a managing director at AlixPartners. While there, she specialised in restructuring and turnarounds. 

Prior to becoming a member of AlixPartners, she was a managing director at Lazard Freres restructuring observe.

Shares plunged on the information.

The retailer stated it acquired a discover of acceleration and default curiosity from JPMorgan because of occasions of default occurring on or round Jan. 13, 2023. Those occasions are stated to be persevering with.

The discover stated Bed Bath & Beyond didn’t prepay an overadvance and fulfill a monetary covenant, or situation of its mortgage settlement.

As a end result, all excellent loans below the corporate’s credit score services are due and payable instantly, together with accrued curiosity and related premiums and costs. 

Additionally, all excellent loans and obligations below the credit score services will bear curiosity at an extra 2% annual default price.

BED BATH & BEYOND SALES SINK, WILL CLOSE 150 STORES

Bed Bath & Beyond retailer, Cherry Hill, N.J., Jan. 8, 2023. (Fox News)

Bed Bath & Beyond had:

• $550.0 million of borrowings excellent below the ABL Facility,
• $186.2 million of excellent letters of credit score issued thereunder, and
• $375.0 million of excellent borrowings below the FILO (first-in last-out) Facility.

In addition, the corporate had:

• $186.2 million in letters of credit score excellent below its ABL Facility,
• $1.030 billion in senior notes

As of Nov. 26, 2022 the corporate had $153.5 million of money and money equivalents.

BED BATH & BEYOND BANKRUPTCY COULD HAPPEN ‘THIS MONTH’

Bed Bath & Beyond storefront (iStock / iStock)

The firm started selling off assets in early January to non-public fairness agency Sycamore Partners forward of a doable bankruptcy submitting and introduced the closing of 150 locations and incremental value reductions of roughly $80 million to $100 million, together with overhead expense and headcount, to ship roughly $500 million in yearly financial savings.

According to the SEC submitting, Bed Bath & Beyond can also be endeavor actions to enhance its monetary place and stabilize its outcomes of operations together with cost-cutting, decreasing capital expenditures, and decreasing its retailer footprint together with associated distribution facilities. 

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Meanwhile, the struggling retailer will proceed on the lookout for reductions in rental obligations with landlords, searching for further debt or fairness capital, decreasing, or delaying enterprise actions and strategic initiatives, or promoting belongings.