Popular discount retail chain files for Chapter 11 bankruptcy

The retail sector suffered more significant financial disaster filings in 2024 after facing several notable Chapter 11 cases within the previous year.

Some big-name retail chains that filed Chapter 11 this year and continue in business consist of mall-based clothing retail chain Express and fabric and crafts store Joann.

Related: Major shipping company shuts down; no financial disaster filing yet

Retailers that weren't as successful in financial disaster included home improvement retailer LL Flooring, teen apparel chain Rue 21, and discount retail chain ninety 9 Cents Simplest, which all filed Chapter 11 financial disaster in 2024 with plans to liquidate and close all of their stores.

A few restaurant chains joined these retail chains in Chapter 11 to reorganize their businesses, as Italian eatery Buca di Beppo filed on Aug. 5, Mexican chain Rubios owned by MRRC Holdco filed on June 5 and seafood giant Red Lobster declared financial disaster on May 19.

The previous year also featured major retail chains filing financial disaster, including Birthday party City, which emerged from Chapter 11 in October 2023 and Rite Aid indirectly exiting on Sept. 5, 2024. Home decor retailers Bed Bath & Beyond and Tuesday Morning filed for Chapter 11 in 2023 and both liquidated their brick-and-mortar locations.

Big A lot to sell its assets in Chapter 11

Eventually, renowned discount home goods retail chain Big A lot (BIG) on Sept. 9 filed for Chapter 11 protection within the U.S. Financial disaster Court for the District of Delaware in search of a sale of its assets to its stalking-horse bidder Nexus Capital Management for a $760 million bid, which contains $2.5 million in cash, debt payoff, and assumption of liabilities.

Related: Mattress Firm rival files for Chapter 11 financial disaster

An auction will likely be held on Oct. 18 if a couple of bidder submits a proposal, with a hearing to approve a sale proposed for Nov. four, in keeping with the debtor's bidding procedures motion.

Nexus will likely be entitled to a $7.5 million break-up fee and as much as $1.5 million in expenses if it be a prolonged way no longer the successful buyer at an auction.

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Big A lot, the nation's fourth largest home goods retailer with general operating revenues of $four.7 billion in 2023, is additionally in search of $707.5 million in debtor-in-possession financing, including $35 million in new money term loans to fulfill the debtor's financial needs at some stage within the financial disaster process.

The Columbus, Ohio, debtor said several significant macroeconomic and industrial-specific headwinds including high competition, Covid-19 disruption, a high interest rate environment, and a less dependable supply chain that increased operating costs were the reasons the corporate needed to file financial disaster, Big A lot chief financial officer Jonathan Ramsden said in a Sept. 9 declaration.

The financial disaster filing and sale are necessary for the corporate after years of slumping sales. The company in Securities and Exchange Commission filings has blamed elevated inflation for adversely impacting its customers' buying power. Big A lot had claimed its core consumers were hesitant to purchase big-ticket discretionary items.

Big A lot has struggled in updated quarters. CEO Bruce Thorn said a downturned economy had soured customers and hurt profits. The company had a 10.2% drop in sales to $1.01 billion at some stage within the first quarter and an absence of $132.three million.

"While we made substantial progress on improving our business operations in Q1, we missed our sales goals due largely to a continued pullback in consumer spending by our core customers, specifically in high ticket discretionary items," Thorn said.

Big A lot in its petition listed $1 billion to $10 billion in assets and liabilities. Its debts consist of $556.1 million in funded debt obligations that consist of a $433.6 million asset-based lending facility and a $122.5 million term loan.

The discount home goods retailer turn out to be established in 1967 and operates over 1,300 stores in forty eight states. The debtor in July revealed that it planned to close 315 stores nationwide.

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