Bed Bath & Beyond, Meme Stock Favorite, Plummets After Chapter 11 Bankruptcy Filing
"We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process," said CEO Sue Gove.
"We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process," said CEO Sue Gove.
Bed Bath & Beyond (BBBY) - Get Free Report shares plunged lower Monday after the struggling home retailer filed a long-expected bankruptcy petition Sunday following a series of failed attempts to rescue its failing business model.
Bed Bath & Beyond listed assets and liabilities in the range of $1 billion to $10 billion each in its Chapter 11 filing with the bankruptcy court for the District of New Jersey, adding it had secured around $240 million in debtor-in-possession funding from Sixth Sixth Specialty Lending.
Debtor-in-possession, or DIP, funding, sits atop all other claims against the business and grants the lender a key role in the bankruptcy proceedings.
Bed Bath & Beyond said it will keep many of its stores operating during the bankruptcy process, but will look to liquidate all 360 Bed Bath and 120 buybuy Baby stores, and liquidate its remaining inventory, by the end of June. The move will likely also eliminate around 14,000 jobs.
The group noted, however, that it could "pivot away" from store closings if its able to find a suitor willing to purchase its retail assets.
"Millions of customers have trusted us through the most important milestones in their lives – from going to college to getting married, settling into a new home to having a baby," said CEO Sue Gove. "Our teams have worked with incredible purpose to support and strengthen our beloved banners, Bed Bath & Beyond and buybuy BABY."
"We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process," Gove added.
Bed Bath & Beyond shares were marked 39% lower in pre-market trading to indicate an opening bell price of 18 cents each, a level that would value the Union, New Jersey-based group at around $83 million.
The stock traded as high as 55 cents per share last week, however, amid renewed retail investor interest following management plans to sell around 111.7 million shares worth of common stock and execute a reverse stock split.
Retail interest, in fact, helped Bed Bath & Beyond raise around $1 billion from a preferred stock sale in early February that included $225 million convertible preferred shares and a further $800 million in warrants linked to the newly-issued stock.
The retailer, which capitalized on the stock's 92% surge at the time, said proceeds from the sale would "pay our outstanding obligations under our credit facilities and senior notes" after defaulting on a loan to JPMorgan (JPM) - Get Free Report at the beginning of the year.
Raising capital to pay bondholders, while planning for a bankruptcy filing that typically wipes out shareholders, could raise questions among its loyal equity holders over the coming weeks.
"We will continue working diligently to maximize value for the benefit of all stakeholders," Gove said Sunday.
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