Ahead of Likely Bankruptcy Filing, Bed Bath and Beyond Looks for Capital Infusion

Bed Bath & Beyond According to sources familiar with the matter, it has been in talks with potential buyers and lenders to help keep its business afloat during a possible bankruptcy filing.

The retailer is currently going through a sale process to find a buyer who would allow it to keep the doors open for its two major chains, Buybuy Baby and its namesake banner, according to the people.

The people also said that Bed Bath was looking for financing to keep the company afloat in case it filed for bankruptcy protection within the next weeks.

A spokeswoman for Bed Bath said Wednesday that although the company doesn’t comment on particular relationships, they have been working with strategic consultants to evaluate all avenues of gaining market share and increasing liquidity.

“Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” The spokeswoman declined to comment further.

CNBC recently reported that AlixPartners was represented by a representative was hired as the company’s advisorShe declined to comment.

This month, Bed Bath warned it may need to file for bankruptcy After its turnaround plans failed, the company lost significant sales and had to repair its balance sheet. The company was sold. reported net losses For the first nine months, the total exceeded $1.12 million. It’s exhausted its liquidity, has accumulated a significant amount of debt, and has had to deal with strained relationships from its suppliers.

Comparable sales declined 32% year over year in the most recent fiscal quarter, Ends November 26. According to company leaders, the company is having a difficult time keeping shelves stocked due to vendors changing payment terms or refusing merchandise shipment because of financial difficulties.

CNBC last week reported Bed Bath had begun another round of layoffs In an effort to further reduce costs. According to public filings, the company had approximately 32,000 employees as at February 26, 2022.

People said that the company had been trying to find a route that would allow its chains to survive. The day before Bed Bath issued a “going concern” warningIt announced in an employee memo that Shawn Hummell, a former Macy’s executive was being hired to head its retail, store operations, and merchandising operations. Hummell will be the senior vice president for stores. Hummell previously worked at Abercrombie & Fitch (another retailer that went through a turnaround).

According to sources familiar with the talks, Sycamore Partners, a private equity firm, is one possible buyer for Bed Bath. Sycamore is interested in Buybuy Baby, Bed Bath’s baby and toddler banner, which has outperformed its broader counterpart. According to the people, Buybuy Baby is most likely to survive.

Still, a sale of Bed Bath as a whole remains on the table — albeit with a much smaller footprint of stores than it currently has, the people said.

Sycamore is known to acquire retailers such as Talbots for women’s apparel, as well distressed businesses that have filed for bankruptcy attention, like Ann Taylor’s Ascena. Sycamore Partners spokesperson refused to comment. Dealbook previously reported Sycamore’s interest at Buybuy Baby.

Companies that acquire intellectual property or brands of companies in distress such as Bed Bath have also shown interest, according to people. According to people, Bed Bath is also being considered by Authentic Brands. This company has been involved in many bankruptcy-run sales for retailers such as Forever 21. A representative from Authentic Brands declined comments.

The advisors and the company have been trying to secure additional financing for a bankruptcy filing. According to one person, the company’s advisors are searching for a loan in excess of $100 million.

Bed Bath received $375million in new funding last year from Sixth Street Partners. Sixth Street Partners also provides financing to other retailers, such as J.C. Penney, Designer Brands, and J.C. Penney.

Sixth Street’s facility could become bankruptcy financing, according to the people. Or, the lender, or others, could convert their debts into equity and become Bed Bath’s owners. Sixth Street representatives declined to comment.

Bed Bath’s finance strategy is shared with another retailer Party City You are being sought Chapter 11 protection This week. Party City, which also has a lot of debt, is looking to restructure and reduce its footprint.

Eric Snyder, a bankruptcy attorney from Wilk Auslander, stated that a sale of Bed Bath was impossible due to the company’s declining sales and inventory as well as its increased losses.

“They don’t have the availability to right the ship, and they don’t have the cash to continue to operate,” Snyder spoke. “I just don’t see any other option other than a bankruptcy and a liquidation.”

—CNBC’s Melissa Repko Contributed to this report.