(Photo : Brandon Bell/Getty Images)
Big Lots, a well-known discount retailer focused on home goods and seasonal products, revealed on Monday (September 9) that it was filing Chapter 11 bankruptcy.
The company, located in Columbus, Ohio, is facing financial difficulties due to the adverse effects of inflation and increasing interest rates. In a significant move as part of its restructuring strategy, Big Lots is set to divest most of its assets to Nexus Capital Management, a private equity firm.
Big Lots Faces Bankruptcy
The recent bankruptcy filing follows the company's announcement of plans to shutter as many as 315 stores across the country, with the possibility of additional closures looming on the horizon.
In light of the obstacles faced, Bruce Thorn, the president and CEO of Big Lots, expressed optimism regarding the company's prospects moving forward.
Big Lots is facing a downturn in sales, as shoppers are reducing their spending on non-essential items such as home décor and seasonal products. With inflation on the rise, consumers are facing increased costs for everyday expenses, which is squeezing their budgets and limiting discretionary spending options.
In a strategic move to navigate the bankruptcy proceedings, Big Lots has successfully obtained $707.5 million in financing. This encompasses $35 million in new loans from several of its existing lenders.
The financing will enable the company to maintain its operations as it moves forward with finalizing the sale to Nexus Capital. The anticipated closure of the sale is projected for the end of 2024, pending approval from the bankruptcy court, according to AP News.
Also Read: Wynn Resorts to Pay $130M in Landmark Case Involving Unlicensed Money Transfers
Big Lots Seeks Protection
According to USA Today, Big Lots has sought the court's approval to maintain payments to its employees and suppliers during this period, aiming to keep its business operations running smoothly and avoid significant interruptions.
Amid ongoing financial challenges, Big Lots is set to proceed with the closure of additional stores as it implements its restructuring strategy. Initially, the company notified the Securities and Exchange Commission of its intention to close 35 to 40 stores; however, this figure has now escalated to 315.
Thorn highlighted the objective of exiting bankruptcy with a simplified and more effective operation. The New York Stock Exchange has issued a warning to Big Lots regarding potential delisting, as the company's stock price has fallen below $1 for a continuous period of 30 days.
The company faces yet another hurdle, as the possibility of an appeal complicates its already challenging circumstances. The upcoming release of the second-quarter earnings report on September 12 is anticipated to provide a more detailed insight into the company's financial status.
Related Article: Boeing Strikes Tentative Deal with Unions, Offers 25% Raise Over Four Years
