By Dietrich Knauth
NEW YORK (Reuters) -Retailer Big Lots (NYSE:BIG) on Tuesday received a bankruptcy judge's approval for a last-minute sale that would 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 that the deal was the best option for Big Lots after a previous sale agreement fell apart.
Big Lots filed for bankruptcy protection in September, seeking to sell its business to private equity firm Nexus Capital. But that deal fell apart earlier this month, causing Big Lots to begin going out of business sales at roughly 900 remaining stores in preparation for a possible shutdown of the company.
Big Lots lined up a backup deal just after the Christmas holiday, saying it intended to partner with investment firm Gordon Brothers Retail Partners to sell its stores, distribution centers and intellectual property. Privately owned retailer Variety Wholesalers agreed to acquire 200 to 400 Big Lots stores as part of that deal.
The sale would preserve 5,000 to 10,000 jobs, and keep the company's brand alive, according to Big Lots.
But the scaled-back transaction would not provide enough money to fully repay Big Lots vendors, like mattress makers Tempur Sealy (NYSE:TPX) and Serta Simmons, that had continued to sell goods to Big Lots after it filed for bankruptcy.
Many of those vendors objected to the sale, saying that Gordon Brothers should not be allowed to take Big Lots' assets if it could not pay the company's vendors.
Beth Rogers (NYSE:ROG), an attorney for Serta, said on Tuesday that Big Lots continued to order furniture and other inventory even after realizing it would not have the funds to pay for them, racking up $250 million in new debts that will likely go unpaid under the revised sale agreement.
Big Lots was the fourth-largest home goods retailer in the U.S. when it filed for bankruptcy, with 1,300 stores, $4.7 billion in 2023 revenue, and over 27,000 employees. The company has been grappling with declining sales over the past few quarters, putting pressure on a balance sheet that already included $556.1 million in debt, according to court documents.