Bed Bath & Beyond Files for Bankruptcy Protection After Failed Turnaround Efforts

Bed Bath & Beyond has filed for bankruptcy protection.

Since early January, the struggling home goods retailer warned of a possible bankruptcy.

As it starts to liquidate and wind down its business, the company will continue to operate its 360 buybuy Baby stores and their 360 namesake locations.

Bed Bath & Beyond

On Sunday, the company filed for Chapter 11 bankruptcy after failing to raise enough funds to keep it alive in its last-ditch attempts to raise money.

Home goods retailer Beleaguered has been a victim of a number of attacks

Warning of potential bankruptcy

Since early January, it has issued a

Notice of "going concern".

It may not be able to pay for expenses after a certain date.

The holiday season is a miserable one

The company's shares closed Friday at 29 cents, valuing it at $136.9million. Stock is down 88% so far this year. It was around $20 per share in April last year.

As the company begins to liquidate assets and wind down its business, it will continue to operate 360 stores under its own name and 120 Buybuy Baby outlets. The company stated in a press release that it had filed motions with the New Jersey bankruptcy court to ask permission to auction off the two brands. The company has already announced that it will close all Harmon FaceValue locations.

Court filings reveal that Bed Bath owed BNY Mellon $1.18 billion, and had assets of $4.4 billion. The documents list a number of creditors including Pinterest, Keurig, and Blue Yonder. However, BNY Mellon is the largest, with $1.18 billion.

"Millions have trusted us to help them through their most important life milestones - from getting married to going to college, to settling in a new house to having a child. Our teams worked with incredible dedication to support and reinforce our beloved banners Bed Bath & Beyond, and buybuy BABY," CEO Sue Gove stated in a press release.

Sixth Street agreed to lend Bed Bath $240 Million in debtor-in possession financing to ensure the company has the cash flow needed to continue its operations during the bankruptcy process. It stated that it would continue to pay wages and benefits to employees, maintain customer programs, and honor its obligations to vendors.

The spiral downward

Bed Bath is hanging by a thin thread but refuses to give up. It was able to secure what at the time, was considered a

Hail Mary stock offer

Bed Bath & Beyond had hoped to inject more than $1 billion into Bed Bath & beyond in early February, but that plan failed and only brought in $360 million.

Bed Bath & Beyond announced their plans for the end of March.

Another stock offering

It hoped that the offering would raise $300 million. However, the news caused the share price to plummet and the company struggled with raising the funds they hoped it would provide. By April 10, the company sold 100.1 million shares, but only raised $48.5 million.

In its filings, the firm warned that if the expected proceeds of the offering were not raised, it was likely to have to seek bankruptcy protection.

Bed Bath announced a partnership with Hilco Global, a liquidator, to increase its inventory. This announcement came just days after the second stock offer was made.

The agreement

ReStore Capital, a Hilco subsidiary, agreed to purchase up to $120 Million in merchandise from Bed Bath & Beyond's main suppliers. This was after the relationship with Bed Bath & Beyond's vendors soured due to its liquidity problems.

Ultimately, however, the plans proved to be futile.

The retailer has struggled with maintaining relationships with its suppliers and has also been struggling with

Low inventory levels

Sales are lagging and the cash is rapidly disappearing.

Bed Bath & Beyond had a difficult time preparing for the holidays.

Stocking up your shelves

In its filings with the Securities and Exchange Commission, the company stated that some vendors started asking for prepayments because of its liquidity problems.

Gove led the company in a turnaround attempt she hoped

Could save your business

But these efforts coincided

High inflation affects consumer spending

While rising interest rates slowed down the housing market.

In addition, those who spent the years 2020 and 2021 updating their homes and staying at home to deal with the pandemic are now spending money on travel, dining out, and other experiences outside of their homes.

The company was founded in mid-January.

Looking for a buyer

It was willing to infuse cash into the company to keep it afloat. Bed Bath & Beyond revealed in an SEC filing that they were considering a sale.

You don't have enough money

JPMorgan had not been able to repay its debts, and the company was in default on its credit agreement.

The company used the funds from its first stock offering to pay its interest, but warned that it would "likely have" to file bankruptcy and liquidate its assets if things didn't work out as planned.

The company had a loan with

JPMorgan

Sixth Street, which were reduced late in March following the announcement of its second stock offer. The total commitment of the revolving facility dropped from $225 to $175 and from $565 to $300. Bed Bath had to pay monthly interest under the new credit agreements.

The company claimed it would reduce costs by cutting capital expenditures.

closing stores

In filings, the company warned that its efforts "may not succeed."

A former Bed Bath employee in New York City told CNBC recently that employees were left standing in the middle of the store, not knowing what to expect after the company abruptly stopped in-store deliveries and pickups. The employee was told that liquidators were coming the next day. He soon found out employees would not receive severance pay after working for the company for more than 20 years.

The worker replied, "It was so fast."