Big Lots approved for last-minute sales of 200 to 400 stores by Reuters

By Dietrich Knauth

NEW YORK (Reuters) – Retailer Big Lots (NYSE: ) received approval from a bankruptcy judge on Tuesday for a last-minute sale that will allow 200 to 400 stores to remain open under new ownership.

U.S. 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 a previous sale agreement fell through.

Big Lots filed for bankruptcy protection in September, seeking to sell its business to private equity firm Nexus Capital. But that deal fell through earlier this month, prompting Big Lots to begin dropping trade sales at about 900 remaining stores in preparation for a possible company shutdown.

Big Lots lined up a rescue deal just after the Christmas holidays, saying it intended to partner with investment firm Gordon Brothers Retail Partners to sell its stores, distribution centers and intellectual property. Private seller Variety Wholesalers agreed to purchase 200 to 400 Big Lots as part of that deal.

The sale will preserve 5,000 to 10,000 jobs, and keep the company’s brand alive, according to Big Lots.

But the scaled-down transaction doesn’t provide enough cash to fully repay Big Lots vendors, such as Tempur Sealy (NYSE: ) mattresses and Serta Simmons, which continued to sell goods to Big Lots after its bankruptcy filing.

Many of those vendors opposed the sale, saying that Gordon Brothers should not be allowed to take over Big Lots’ assets if it could not pay the company’s vendors.

Beth Rogers (NYSE: ), an attorney for Serta, said Tuesday that Big Lots continued to order furniture and other inventory even after realizing it didn’t have the funds to pay for them, racking up $250 million in new debt. that they will probably go. unpaid under the revised 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 has faced declining sales in recent quarters, putting pressure on a balance sheet that already includes $556.1 million in debt, according to court documents.