Exclusive: Bed Bath & Beyond preparing to file bankruptcy as soon as this week -sources

A person exits a Bed Bath & Beyond store in Manhattan, New York City
A person exits a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly/File Photo

NEW YORK, Jan 30 (Reuters) - Bed Bath & Beyond Inc (BBBY.O) is preparing to seek bankruptcy protection as soon as this week, and has lined up liquidators to close additional stores unless a last-minute buyer emerges, four people familiar with the matter said on Monday.

The timing of any bankruptcy filing was in flux Monday evening, with the U.S. home goods retailer's advisers locked in meetings exploring any remaining options to avoid it, another person familiar with the matter said.

Bed Bath & Beyond is negotiating a loan to help it navigate bankruptcy proceedings, with investment firm Sixth Street in talks to provide some funding, two of the people said. The firm loaned Bed Bath & Beyond $375 million last year.

The chain, once considered a category killer in home goods like dinnerware and small appliances, has lined up liquidators who are readying store closing sales that could be launched as soon as this weekend, two of the people said.

The people spoke on condition of anonymity because the talks are not public.

The chain has said it is closing 87 Bed Bath & Beyond stores and five buybuy BABY stores, in addition to 150 closures announced last year. It is also shutting its health and beauty discount chain Harmon.

The people cautioned that a last-minute buyer for the chain could emerge, or it could still ink a deal for its brands such as buybuy BABY. Prospective buyers sometimes wait until a company files for bankruptcy before agreeing to purchase assets, hoping to negotiate more favorable terms.

Bed Bath & Beyond said in a statement to Reuters that it continued to work with its advisers to consider "multiple paths" but declined to comment on any bankruptcy planning.

The company has previously said it was exploring a range of options to address plunging sales, including selling assets, raising financing and declaring bankruptcy.

Sixth Street declined to comment.

Bed Bath & Beyond said last week it defaulted on a loan, bringing it closer to bankruptcy. Sources have also told Reuters that Bed Bath & Beyond is considering skipping debt payments due on Feb. 1, a typical move that distressed companies take to conserve cash.

Retailers in distress often decide to file for bankruptcy protection after the holiday season to take advantage of the cash cushion provided by recent sales.

Toys R Us liquidated in March 2018 in one of the largest failures to date of a specialty retailer.

As of February 2022, Bed Bath & Beyond had 953 locations, including buybuy BABY.

Bed Bath & Beyond for years had been considered a go-to shopping destination for couples making wedding registries and planning for new babies, but it lost its footing when it tried to expand into store brands.

The retailer's management has since reversed course and aimed to bring in national brands shoppers knew the chain for. But the strategy has not gained traction with shoppers.

Earlier this month, the company raised doubts about its ability to continue as a going concern and said it would cut jobs.

Bed Bath & Beyond reported a loss of about $393 million after sales plunged 33% for the quarter ending Nov. 26.

Reporting by Jessica DiNapoli and Mike Spector; Editing by Cynthia Osterman and Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

New York-based reporter covering U.S. consumer products and the companies that make them, and the role they play in the economy. Previously reported on corporate boards and distressed companies. Her work has included high-impact stories on CEO pay, Wall Street bubbles and retail bankruptcies. Signal app: 845-591-4428

Thomson Reuters

Mike Spector is a correspondent at Reuters covering corporate crises that span bankruptcy, mass tort litigation and government investigations. He was the first to expose Johnson and Johnson’s plan to offload into bankruptcy lawsuits alleging its iconic Baby Powder caused cancer. He later revealed in an investigative series how J&J and other businesses and nonprofits use the bankruptcy system to escape liability for lawsuits over deadly products and sexual abuse while avoiding filing for Chapter 11 themselves. Mike has also contributed to an award-winning Reuters series on pervasive secrecy in American courts that covers up evidence of deadly products. Mike previously worked at The Wall Street Journal, where he covered bankruptcy and private equity on the paper’s mergers and acquisitions team, and also the automotive industry. He has been part of award-winning teams that covered the government-brokered rescue and bankruptcy of General Motors; insider trading and related bankruptcy debt-trading issues; and emerging concerns with Tesla’s self-driving car technology. He has a master’s degree from Columbia University’s journalism school and an undergraduate degree from Johns Hopkins University.