BANKRUPT Big Lots has struck a deal to save hundreds of stores after an earlier sale of the business fell apart, saving the chain from closing down entirely.
The company said on Friday (Dec 27) it has agreed to a transaction with Gordon Brothers Retail Partners that will facilitate the transfer of Big Lots’ brand, stores and distribution centres to other operators. The proposed transaction would avert the potential closing of all Big Lots locations after an earlier deal to sell the business to Nexus Capital Management LP unravelled earlier this month.
Big Lots said Variety Wholesalers, which operates several discount chains in the South-east and mid-Atlantic region, intends to acquire between 200 and 400 locations as part of the transaction, the company said. Variety Wholesalers intends to keep operating stores under the Big Lots name and “may employ Big Lots associates at the acquired stores and distribution centres, as well as certain corporate associates needed to support the go-forward footprint”, the retailer said.
The proposed transaction is subject to certain closing conditions and must be approved by a bankruptcy judge. Big Lots is scheduled to next appear in Delaware bankruptcy court on Monday.
Big Lots operated more than 1,300 locations and employed more than 27,000 workers when it filed Chapter 11 in September and had spent months working with Nexus. But the deal unravelled after an appraisal of the company’s inventory was lower than expected, making the economics of the sale to Nexus no longer viable, Bloomberg News reported.
The company subsequently announced in bankruptcy court that it would begin going out-of-business sales at about 870 locations and advisers worked to find an alternative transaction to save hundreds of Big Lots stores. Judge J Kate Stickles, who is overseeing the Chapter 11 case, had warned lawyers that Big Lots had little time to find a new transaction.
Big Lots president and CEO Bruce Thorn said on Friday that the deal with Gordon Brothers and Variety Wholesalers was the company’s best opportunity to save jobs, maximise the value of its assets and continue the Big Lots brand. BLOOMBERG
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