by Retail chain could be liquidated as early as Feb. 1 if deal can’t be salvaged or no new buyer emerges
WILMINGTON, Del. — Nexus Capital Management has pulled out of its deal to acquire Big Lots out of bankruptcy for an estimated $760 million. As a result, Big Lots announced plans to immediately begin closing all remaining stores, or roughly 960 locations.
If no new buyer emerges, or if the deal with Nexus Capital can’t be salvaged, Big Lots could be liquidated by as early as Feb. 1.
“We all have worked extremely hard and have taken every step to complete a going-concern sale,” said Bruce Thorn, Big Lots president and CEO, via a press release. “While we remain hopeful that we can close an alternative going-concern transaction, in order to protect the value of the Big Lots estate, we have made the difficult decision to begin the GOB process.”
The question now becomes whether a buyer will emerge soon enough to slow or stop a liquidation process that promises to be brief and to quickly accelerate in the new year. Big Lots says it continues to serve its customers both in-store and online, but the momentum toward liquidation likely will only grow.
Of the 960 stores left, approximately 300 have already begun GOB sales. Another 250 locations are expected to follow in a matter of days. Since the bankruptcy filing on Sept. 9, more than 425 locations have shuttered. Before the filing, the chain had approximately 1,400 locations.
At least some of these early closings could be a factor in the acquisition disintegrating. Many of the leases for these shuttered stores still are in question, with leaseholders among the rafts of creditors seeking compensation. According to court filings, Big Lots is on the hook for nearly $90 million in back rents, enough for an official committee of unsecured creditors to motion to order Big Lots to pay the back rents or move to Chapter 7 liquidation.
So far, Big Lots has defaulted on an estimated $23 million in rents since the September filing, and it owes another $66 million for goods that its vendors sold to the company, according to court filings. At the time of the Chapter 11 filing, Big Lots had debts of more than $3 billion.
In addition, according to a report from Bloomberg, a valuation appraisal of the company’s remaining inventory disappointed, “making the economics of the sale to Nexus no longer viable,” according to an anonymous source.
Another repercussion of Thursday’s announcement will be imminent layoffs. Thorn stated that “a reduction in (work) force is necessary,” and that the layoffs will begin in January. As of the filing, Big Lots counted 27,000 employees.
The case’s court filings, docket and information on filing claims are available via the claims agent for Big Lots, Kroll Restructuring Administration.
