by Almost directly adjacent to the Big Lots here in Rome, Georgia, is Bargain Hunt. Less than two blocks in the other direction is, or was until late last year, Badcock Home Furnishings. We’ll call it Murderers’ Row because Bargain Hunt just joined the other two in bankruptcy.
The Nashville, Tennessee-based “extreme” value chain added its name to the disturbingly long list of retail chains filing for bankruptcy protection on Friday. Liquidation sales for 92 stores in 10 states are already underway, and the court filing states that all should be shuttered by the end of the month. We visited the Rome location Sunday to look in on the carnage; about half of the store’s inventory already was gone.
Rome also has, at least for a little while longer, a Red Lobster and a handful of locations each for CVS and Walgreen’s. And until last year, the city sported a few Family Dollar units, as well. All of these have either shut down, filed or announced plans to file.
While Bargain Hunt didn’t include reasons for filing in its Chapter 11 submission, it isn’t difficult to surmise why. My wife and I traditionally spend Halloween fleeing the costumed crowds by eating a nice dinner out and then blitz shopping our local discounters, including a stop into Bargain Hunt. We witnessed frightfully few shoppers treading a stained, marred retail floor under lighting suitable for — you guessed it — Halloween. Spooky!
Bargain Hunt parent Essex Technology Group filed with the U.S. Bankruptcy Court for the Middle District of Tennessee, citing more than 1,000 creditors, between $50 million and $100 million in liabilities and assets somewhere in the range of $10 million and $50 million. That’s math that adds up to calling it quits.
In addition to Georgia and Tennessee, the chain has stores in Alabama, Arkansas, Indiana, Kentucky, Mississippi, North Carolina, Ohio and South Carolina.
Bargain Hunt has had an on-again, off-again commitment to home furnishings, a dynamic likely determined more by happenstance than strategic planning. Relying on closeouts, buyouts and overstock inventory, or “reverse logistics,” Bargain Hunt’s floor selection was always unpredictable. As of the most recent Halloween, the furniture “section” featured only a smattering of one-off items, most of them occasional tables.
The GOB sales are being managed by Hilco Consumer-Retail in a joint venture with Gordon Brothers, the last-minute buyers of what is left of Big Lots. More on Big Lots in a moment.
A listing of all the locations set to shutter can be seen here.
Bankruptcy Blues
It shouldn’t surprise that the number of U.S. businesses filing for Chapter 11 bankruptcies last month topped last January, according to the American Bankruptcy Institute. In all, there were 540 commercial Chapter 11 filings last month, a 16% jump over January 2024. And that’s on top of 2024, when commercial Chapter 11 filings were up 20%, according to ABI.
According to a report from S&P Global, there were nearly 700 corporate bankruptcies last year, the highest since 828 in 2010. The report cited “elevated interest rates, especially as total debt among credit-rated nonfinancial U.S. companies reached a quarterly record of $8.5 trillion and interest coverage remained weak in the third quarter of the year.”
Also not surprisingly, leading the bankruptcy list by sector was “consumer discretionary,” which includes furniture, with industrials second. Third was health care, followed by consumer staples information technology, financials, communication services, real estate, materials, energy and utilities.
Big Lots Bust
I mentioned the coincidence that Gordon Brothers, buyers of what’s left of Big Lots, also is connected to the Bargain Hunt liquidation. The Big Lots bankruptcy looked like it was going smoothly, predictably, and for creditors hopefully, until it suddenly wasn’t. Now Big Lots is a case study in how quickly a bankruptcy can go from bad to shitshow.
The law firm of Stark & Stark had an interesting take on the Big Lots dumpster fire last week, laying out the risks of doing business with debtors-in-possession. As the firm’s Joseph Lemkin put it, “Big Lots’ proposed creditor protections proved to be mirages leaving post-petition claims substantially exposed to non-payment.”
In other words, creditors hung in there with Big Lots after the filing on the reasonable, time-tested assumption that, with the court’s supervision, they would be re-paid. But, when Nexus Capital pulled its proposal to acquire Big Lots, the assurances the DIP issued to store leaseholders and vendors turned bad like fruit in the summer sun. The additional $215 million in debt taken on to keep the chain going ran out.
Big Lots also assured vendors payment of pre-bankruptcy claims to get the continued open credit.
“Simply put, Big Lots exposed its trade credit and landlord constituents to well over $250 million of post-petition credit to close the deal with Nexus,” Lemkin writes.
So, Big Lots faced total liquidation and, as Lemkin puts it, “a massive administratively insolvent estate, with little, if any, of the post-petition obligations to be paid.”
As it is, Gordon Brothers is on the hook for only “select” post-petition creditor claims, meaning most creditors, including most of the leaseholders and vendors, will be left holding the proverbial bag. The plan submitted to acquire the remaining 200 to 400 stores, a plan that was approved by the court over creditor objections, creates a hierarchy of creditors but without any preference given to the post-petition obligations, according to Lemkin’s reading.
“The $250 million in other post-bankruptcy claims remains largely unpaid,” he wrote. “Big Lots and [Gordon Brothers] carved out approximately $19 million in assets (tax refunds, litigation proceeds and a percentage of real estate sales), which will remain behind to pay a paltry dividend to administrative claimants.”
The Phoenix Rises
Enough bad news. How about a smile to take us out?
Down in Jacksonville, Florida, Badcock officially become Hometown Furniture last week. Located in Orange Park, the Jax store is owned by Chris Hage and Jamie Bliss, owner-operators of the Badcock store that preceded Hometown. Their location joins the five Hometown Furniture locations already in operation in Florida, Georgia and Alabama.
As reported by Home News Now last month, former Badcock execs Robert Ball and Matt Pridemore founded Hometown Furniture in October last year to re-brand what were Badcock Home locations. According to a press release, Hometown Furniture locations all are independently owned and operated, and the goal is to reach 33 locations in six states.
“The transition from Badcock to Hometown Furniture has been one of the most challenging experiences we have faced in our careers,” Bliss said, “particularly when we reflect on the challenges we have already overcome, including the loss of our store in a fire in 2016 and the impact of Covid-19.”
She said she and her husband are focused on “rebuilding and restoring the level of service and support that was lost with the closure of Badcock locations.”
We wish them well, and the Orange Park location should help. It’s a vibrant, fast-growing area of Jacksonville.
