Discount Retailer Big Lots Files for Bankruptcy, Will Sell Business to Private Equity Firm
By Isabelle Durso September 9, 2024 1:34 pm
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Furniture and home goods seller Big Lots filed for bankruptcy on Monday, the latest retailer to start Chapter 11 proceedings in recent weeks.
Big Lots has entered into an agreement to sell its business to private equity firm Nexus Capital, which will serve as the “stalking horse bidder” for the company as Big Lots begins Chapter 11 proceedings, Big Lots announced Monday. If Nexus’ $620 million offer — which set the floor for offers to acquire Big Lots — is deemed the winner, the deal is expected to close during the fourth quarter of 2024, according to court docs.
The discount goods retailer also said Monday that it has secured $707.5 million of financing — including $35 million in new funding from current lenders — to support its operations through bankruptcy proceedings.
“The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value,” Big Lots CEO Bruce Thorn said in a statement.
Big Lots has already shuttered more than 300 locations across the country recently and, during the Chapter 11 process, it said it will “close additional store locations.” A spokesperson for Big Lots declined further comment.
The retailer has assets and liabilities listed in the range of $1 billion to $10 billion, according to a filing with the U.S. Bankruptcy Court for the District of Delaware. Big Lots is expected to release its full second-quarter results Sept. 12.
The provided financing to Big Lots, along with revenue generated from its ongoing operations, is expected to support the company as it completes the sale with Nexus.
“We are excited to have the opportunity to partner with Big Lots and help return this iconic brand to its status as America’s leading extreme value retailer,” Evan Glucoft, managing director of Nexus, said in a statement. “The Big Lots business has incredible potential, and we are confident that its greatest days are ahead.”
Big Lots, which operates around 1,400 stores across the U.S. and has more than 30,000 employees according to Reuters, has joined a long list of retailers heading for bankruptcy as they continue to struggle following the pandemic.
For example, retailer LL Flooring announced Friday that it had officially shut down after filing for bankruptcy last month and failing to secure a buyer, while 99 Cents Only and Conn’s HomePlus also recently shuttered their stores.
Big Lots has followed suit after saying in a July 31 filing with the U.S. Securities & Exchange Commission that it had planned to close up to 315 locations by February 2025.
Factors such as high inflation and interest rates cut down on Big Lots’ efforts to bounce back as “customers curbed their discretionary spending on the home and seasonal product categories that represent a significant portion of the company’s revenue,” Big Lots said Monday.
Now, Big Lots will hand over its business to Nexus as “the best path forward to maximize value and ensure continued operations,” the company added.
But there may be a light at the end of the tunnel for retailers, as companies like Rite Aid and Red Lobster emerge from bankruptcy with new funding and new CEOs.
Isabelle Durso can be reached at idurso@commercialobserver.com.
