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Bed Bath & Beyond liquidating as it sells assets

headshot
A store closing sign hanging over a Bed Bath & Beyond store front.

Photo: Don & Melinda Crawford/UCG/Universal Images Group via Getty Images

Bed Bath & Beyond filed for Chapter 11 protection in U.S. Bankruptcy Court in New Jersey yesterday to begin a wind-down process as it seeks buyers for one or more of its assets.

Why it matters: It's the latest in a string of retail bankruptcies this year, and industry sources expect a steady pace for the rest of 2023.

Details: After a valiant effort by its management team to stave off bankruptcy and find a buyer, the home goods retailer ran out of financial options.

  • Sixth Street Specialty Lending, a unit of investment firm Sixth Street Partners, is providing a $240 million debtor-in-possession (DIP) loan to fund the company.
  • BBBY listed total assets of $4.4 billion and total debt of $5.2 billion as of last November, per court documents.
  • BNY Mellon, which is the trustee for three tranches of nearly $1.2 billion in unsecured bonds, is listed as the top unsecured creditor.
  • Assets include the company's intellectual property, such as brand names Bed Bath & Beyond, buybuy Baby and Wamsutta bedding.

What they're saying: "Bed Bath & Beyond’s probable liquidation is due to the company’s ongoing weak operations and cash drain, which would have likely continued even with a lower interest burden after shedding debt in bankruptcy," says David Silverman, a senior director at Fitch.

  • "BBBY serves as a stark reminder to all traditional brick-and-mortar stores: adapt to the fast-paced demands of modern consumers or risk sinking in today's hyper-competitive retail environment," says James Gellert, CEO of financial analytic firm RapidRatings.
  • "BBBY has made a heroic, yet likely quixotic, attempt to avoid bankruptcy," Gellert says.

The big picture: "BBBY's current financial struggles are emblematic of the challenges faced by highly leveraged companies in today's economic climate," he says.

  • "This issue is becoming increasingly common among both public and private companies, as a multitude of factors — such as inflation and materially higher interest rates — have impacted operations and created unsustainable debt capital structures."
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