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Big Lots’ Bankruptcy Financing and Store Closure Plans

Posted: October 18, 2024 | Updated:

Big Lots, a retailer specializing in discounted home goods, recently filed for bankruptcy due to slow demand influenced by high interest rates and a sluggish housing market. Following the bankruptcy filing, Big Lots secured court approval to access $550 million out of a possible $707.5 million in bankruptcy financing, as detailed in recent court filings and a company announcement on Wednesday.

Additionally, as disclosed in Big Lots bankruptcy documents, it has arranged to sell its business to Nexus Capital Management. The agreed sale price is approximately $760 million, which includes $2.5 million in cash, along with the assumption of the company’s remaining debts and liabilities.

Key Takeaways
  • Bankruptcy Filing and Financing: Big Lots filed for Chapter 11 bankruptcy, securing $550 million out of a potential $707.5 million in financing to continue operations during restructuring. This retail financing will help manage operational costs, including employee wages and vendor payments.
  • Asset Sale to Nexus Capital Management: As part of the restructuring, Big Lots plans to sell its assets to Nexus Capital Management for approximately $760 million, which includes the assumption of the company’s debt and liabilities.
  • Widespread Store Closures: The company has announced over 550 store closures across 27 states, with the largest impact in California, Texas, Ohio, and Washington. This is part of Big Lots’ efforts to streamline operations and focus on profitable locations.
  • Industry Challenges: Big Lots’ financial difficulties stem from reduced consumer spending on non-essential items, high interest rates, and intense competition from other discount retailers, which contributed to its decision to file for bankruptcy.

Big Lots Files for Chapter 11 Bankruptcy Amid Store Closures, Gets Over $700 Million in Financing for Restructuring

Big Lots Files for Chapter 11 Bankruptcy Amid Store Closures, Gets Over $700 Million in Financing for Restructuring

Big Lots, a discount retailer headquartered in Ohio, sought Chapter 11 bankruptcy protection in September 2024 following a stretch of financial strain exacerbated by the COVID-19 pandemic, inflation, and elevated interest rates. These conditions led to decreased spending on non-essential items like home goods and seasonal products, which are crucial for Big Lots’ revenue. To maintain operations while reorganizing, Big Lots bargained $707.5 million in bankruptcy financing, which comprises $550 million in debtor-in-possession (DIP) financing and an additional $157.5 million in new term loans.

The retail financing and cash flow from current operations should ensure sufficient liquidity for Big Lots to maintain regular activities, such as compensating employees and settling payments with vendors, during Big Lots bankruptcy proceedings.

CEO Bruce Thorn stated that with the judicial relief obtained and lender support, Big Lots aims to navigate this period and reemerge as a revitalized entity focused on effectively serving its customers.

In the bankruptcy proceedings, Big Lots has secured a preliminary purchase agreement with Nexus Capital Management. Nexus proposes to acquire most of Big Lots’ assets and operations for $620 million, acting as the initial “stalking horse” bidder to set the minimum bid for other potential buyers in a court-managed auction. Should no superior bids emerge, Nexus anticipates finalizing the purchase in the year’s final quarter.

Big Lots’ bankruptcy filing disclosed substantial debt, with liabilities estimated between $1 billion and $10 billion, affecting thousands of creditors. A combination of declining sales, high operational costs, and unresolved losses from the pandemic period led to the retailer’s financial downturn.

The New York Stock Exchange has also alerted the company due to its shares closing below $1 for 30 consecutive trading days. This notification does not imply immediate delisting, as Big Lots can challenge this. In premarket trading, the shares dropped 40% to 30 cents.

In response, Big Lots has significantly reduced its retail footprint. Initially operating over 1,400 stores in 48 states, the company first announced the closure of about 40 stores following a severe financial downturn, which included a 10% sales drop and a quarterly loss of $205 million. In August, facing continued financial challenges and the threat of loan default, Big Lots increased its planned store closures to 315.

 big lots store picturee

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The scale of closures escalated further when Big Lots filed for Chapter 11 bankruptcy protection this month. Initially, 344 stores were slated for closure. Still, this number was expanded to 451 across the U.S. Subsequently, an additional 56 stores were added to the closure list on October 17, raising the total to over 550 store closures distributed across 27 states, with the largest numbers in California, Texas, Ohio, and Washington.

Big Lots has encountered significant challenges stemming from both sector-wide trends and its own strategic errors. The shift in consumer preferences towards online shopping has pressured physical store operations, particularly in the discount retail sector where Big Lots operates. Plus, the company has faced robust competition from other discount retailers like Dollar General and Five Below, which have more effectively adjusted to the evolving market dynamics.

The company’s decision to file for bankruptcy aims to reorganize its debt while it continues to operate, though on a reduced scale. Nexus Capital’s prospective acquisition is anticipated to provide Big Lots with the necessary financial relief. Nexus sees potential in Big Lots and aims to reestablish its position as a prominent player in the discount retail market by implementing cost-reduction strategies, improving inventory management, and possibly enhancing its online offerings.

The restructuring process, including store closures, introduces considerable uncertainty for Big Lots’ workforce, which exceeds 30,000 employees. Many may face job losses as the company plans to downsize its operations and maintain only profitable stores.

In a letter to its business partners, Big Lots outlined recent challenges, including record inflation and high interest rates post-pandemic, which have suppressed consumer spending. The company assured its vendors of full payment for deliveries post-bankruptcy. Furthermore, Big Lots communicated in the letter that Nexus is confident in the company’s business and its potential. With the support from Nexus, Big Lots expects to bolster its long-term performance and profitability.

Big Lots’ Store Closure List (Old and New Updated List)

Here are two tables with the requested columns (state, county, and store address) for the Big Lots stores that have already closed:

Big Lots Stores That Have Already Closed

StateCityStore Address
AlabamaTroy1327 S. Brundidge St.
ArizonaFlagstaff1416 E. Route 66
ArizonaGlendale17510 N. 75th Ave
ArizonaLaveen3630 W. Baseline Road
ArizonaMesa2840 E. Main St., Suite 109
ArizonaMesa6839 E. Main St.
ArizonaPeoria24760 N. Lake Pleasant Parkway
ArizonaPhoenix2020 N. 75th Ave., Suite 40
ArizonaPhoenix230 E. Bell Road
ArizonaPhoenix4727 E. Bell Road
ArizonaPhoenix2330 W. Bethany Home Road
ArizonaPhoenix4835 E. Ray Road
ArizonaScottsdale10220 N. 90th St.
ArizonaTucson4525 N. Oracle Road
CaliforniaAnaheim1670 W. Katella Ave.
CaliforniaAnaheim6336 E. Santa Ana Canyon Road
CaliforniaAtascadero2240 El Camino Real
CaliforniaAtwater1085 Bellevue Road
CaliforniaBakersfield1211 Olive Drive
CaliforniaBakersfield2621 Fashion Place
CaliforniaBeaumont1482 E. 2nd St.
CaliforniaCamarillo353 Carmen Drive
CaliforniaCanyon Country19331 Soledad Canyon Road
CaliforniaChico1927 E. 20th St.
CaliforniaConcord2060 Monument Blvd.
CaliforniaCorona740 N. Main St.
CaliforniaCulver City5587 Sepulveda Blvd.
CaliforniaDelano912 County Line Road
CaliforniaEl Cajon1085 E. Main St.
CaliforniaFairfield1500 Oliver Road
CaliforniaFolsom9500 Greenback Lane, Suite 22
CaliforniaFresno7370 N. Blackstone Ave.
CaliforniaGilroy360 E. 10th St.
CaliforniaHercules1551 Sycamore Ave.
CaliforniaIndio42225 Jackson St., Suite B
CaliforniaLa Mesa6145 Lake Murray Blvd.
CaliforniaLivermore4484 Las Positas Road
CaliforniaLompoc1009 N. H St., Suite M
CaliforniaLong Beach2238 N. Bellflower Blvd.
CaliforniaLos Banos951 W. Pacheco Blvd.
CaliforniaManteca1321 W. Yosemite Ave.
CaliforniaMerced665 Fairfield Drive
CaliforniaMilpitas111 Ranch Drive
CaliforniaModesto3900 Sisk Road
CaliforniaOceanside1702 Oceanside Blvd.
CaliforniaOntario4430 Ontario Mills Parkway
CaliforniaPlacerville47 Fair Lane
CaliforniaRancho Santa Margarita30501 Avenida De Las Flores
CaliforniaRedlands810 Tri City Center
CaliforniaRiverside2620 Canyon Springs Parkway
CaliforniaRohnert Park565 Rohnert Park Expressway
CaliforniaSacramento6630 Valley Hi Drive
CaliforniaSacramento8700 La Riviera Drive
CaliforniaSalinas370 Northridge Mall
CaliforniaSan Bernardino499 W. Orange Show Road
CaliforniaSanta Clara3735 El Camino Real
CaliforniaSanta Maria1417 S. Broadway
CaliforniaSanta Paula568 W. Main St., Suite B
CaliforniaSanta Rosa2055 Mendocino Ave.
CaliforniaSimi Valley1189 Simi Town Center Way
CaliforniaStockton2720 Country Club Blvd.
CaliforniaTemecula27411 Ynez Road
CaliforniaTracy2681 N. Tracy Blvd.
CaliforniaTurlock1840 Countryside Drive
CaliforniaUkiah225 Orchard Plaza
CaliforniaVacaville818 Alamo Drive
CaliforniaVisalia2525 S. Mooney Blvd.
CaliforniaWoodland52 W. Court St.

New List of 56 Big Lots Store Closures (October 2024)

StateCityStore AddressPincode
AlabamaHomewood142 Green Springs Hwy35209
ArkansasConway150 E Oak St72032
ArizonaLake Havasu City1799 Kiowa Ave #10686404
CaliforniaHesperia16824 Main St92345
CaliforniaReedley1201 E Manning Ave93654
CaliforniaSanta Ana2727 N Grand Ave92705
CaliforniaRedding2685 Hilltop Dr96002
ColoradoBrighton893 S Kuner Rd80601
ConnecticutBristol1235 Farmington Ave06010
FloridaOrlando751 Good Homes Rd32818
FloridaTampa14948 N Florida Ave33613
GeorgiaKennesaw4200 Wade Green Rd NW Ste 14430144
GeorgiaCartersville160 Market Sq30120
IllinoisDecatur1383 E Pershing Rd Ste A62526
IllinoisMachesney Park8750 N 2nd St61115
IndianaFranklin1538 North Morton St46131
IndianaNew Haven918 W Lincoln Hwy46774
IndianaNew Albany440 New Albany Plz47150
IowaBurlington3320 Agency St52601
KansasShawnee7408 Nieman Rd66203
LouisianaLake Charles3250 Gerstner Memorial Dr70601
MarylandEdgewood1815 Pulaski Hwy21040
MarylandWaldorf1200 Smallwood Dr W20603
MichiganSouthfield29712 Southfield Rd48076
MichiganLivonia30000 Plymouth Rd48150
MissouriBlue Springs603 SW US Highway 4064014
MissouriFenton691 Gravois Bluffs Blvd63026
NebraskaFremont850 E 23rd St68025
New MexicoAlbuquerque465 Coors Blvd NW87121
New MexicoAlbuquerque9500 Montgomery Blvd NE87111
North CarolinaBoone223 New Market Ctr28607
OhioWesterville60 E Schrock Rd43081
OhioBrunswick1733 Pearl Rd Ste 12544212
OhioHighland Heights6235 Wilson Mills Rd44143
OhioNorth Olmsted26425 Great Northern Plaza44070
OklahomaTulsa2144 S Sheridan Rd74129
OklahomaAda1200 N Hills Center74820
PennsylvaniaPhiladelphia15501 Bustleton Ave19116
PennsylvaniaWhitehall2631 Macarthur Rd18052
TennesseeElizabethton791 West Elk Ave37643
TennesseeChattanooga2020 Gunbarrel Rd Ste 18637421
TexasParis3512 Lamar Ave75460
TexasTexarkana2729 New Boston Rd75501
TexasSpring425 Sawdust Rd Ste A77380
TexasLewisville1374 W Main St75067
TexasCedar Park850 N Bell Blvd #10478613
TexasDenton2249 S Loop 28876205
TexasSan Angelo4002 Sunset Drive76904
VirginiaChesapeake4300 Portsmouth Blvd23321
VirginiaGloucester6571 Market Dr23061
VirginiaRichmond8151 Brook Rd23227
WashingtonTacoma2401 N Pearl St98406
WashingtonYakima120 N Fair Ave98901
WashingtonVancouver11696 NE 76th St98662
WashingtonKennewick3019 W Kennewick Ave99336
WisconsinJanesville1800 Milton Ave Ste 10053545

About Big Lots

About Big Lots

Image source

Big Lots, Inc., is a discount retail company based in North America, operating 1,425 stores in 48 U.S. states as of January 28, 2023. The company is divided into two segments: U.S. and Canada. Its product offerings are organized into several categories: Furniture, Consumables, Seasonal, Home, Hardlines & Other, and Playn’ Wear. The Consumables category comprises health and beauty products, food, paper goods, plastics, pet supplies, and chemicals.

The Furniture category features ready-to-assemble furniture, mattresses, upholstery, and case goods. The Home category includes items like stationery, textiles, and home decor. Seasonal items cover summer goods, Christmas decorations, and other holiday-specific products. Playn’ Wear includes electronics, jewelry, toys, apparel, and infant accessories. Lastly, the Hardlines & Other category offers tools, appliances, paint, and home maintenance products.

Conclusion

Big Lots’ Chapter 11 bankruptcy filing marks a critical point in its history as it grapples with significant financial challenges, including reduced consumer demand and rising operational costs. The company’s secured financing and planned sale to Nexus Capital Management offer a path forward, though it involves substantial downsizing with over 550 store closures.

As the retailer restructures, it aims to adapt to market dynamics, reduce costs, and potentially refocus its business strategy to remain competitive in the discount retail sector. The outcome of these efforts will shape Big Lots’ future in a highly competitive marketplace.

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