Written by Dietrich Knuth
NEW YORK (Reuters) – Department store retailer Big Lots (NYSE:) on Tuesday won approval from a bankruptcy judge for a last-minute sale that would allow 200 to 400 stores to stay open under new ownership.
US Bankruptcy Judge Kate Stickles approved the sale at a court hearing in Wilmington, Delaware, saying the deal was the best option for Big Lots after the collapse of the previous sales agreement.
Big Lots filed for bankruptcy protection in September, seeking to sell its business to private equity firm Nexus Capital. But that deal collapsed earlier this month, causing Big Lots to stop selling in its roughly 900 remaining stores in preparation for a possible closure of the company.
Big Lots struck a back-up deal just after the Christmas holiday, saying it intends to partner with investment firm Gordon Brothers Retail Partners to sell its stores, distribution centers and intellectual property. Privately held retailer Variety Wholesalers agreed to acquire 200 to 400 Big Lots stores as part of that deal.
A sale would save 5,000 to 10,000 jobs and keep the company's brand alive, according to Big Lots.
But the scaled-back deal won't provide enough money to fully repay Big Lots' vendors, such as mattress makers Tempur Sealy (NYSE:) and Serta Simmons, who continued to sell goods to Big Lots after it filed for bankruptcy.
Many of those sellers objected to the sale, saying Gordon Brothers should not be allowed to seize Big Lots' assets if it could not pay the company's sellers.
Beth Rogers (NYSE:), a lawyer for Serta, said Tuesday that Big Lots continued to order furniture and other inventory even after it realized it wouldn't have the money to pay for it, racking up $250 million in new debt that will likely You go. Not paid under the amended sales agreement.
Big Lots was the fourth-largest home goods retailer in the United States when it filed for bankruptcy, with 1,300 stores, $4.7 billion in 2023 revenue, and more than 27,000 employees. The company had been struggling with declining sales over the past few quarters, putting pressure on a balance sheet that already included $556.1 million in debt, according to court documents.
