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How Bed Bath & Beyond is hedging its bankruptcy bet

  • May 7, 2023

Bed Bath & Beyond (BBBY) is hedging its bankruptcy bets, simultaneously posturing for a wind down while also vying to stay in business.

The dual-track strategy emerged Sunday as the home goods retailer filed for protection of its assets under Chapter 11 of the US Bankruptcy Code.

A Chapter 11 filing typically helps financially distressed companies work out a plan with their creditors to reorganize debt and emerge as a viable entity. But Bed Bath & Beyond announced it would focus on liquidating assets, a path typically pursued as part of a Chapter 7 bankruptcy.

The failed housewares chain said the dual-track strategy was the best way to maximize value for stakeholders. A press release stated it had already initiated a liquidation sale, though would conduct a limited marketing process to solicit interest in some or all of its assets.

“In the event of a successful sale, the company will pivot away from any store closings needed to implement a transaction,” the company said.

Other distressed companies have taken a similar path. David’s Bridal, which filed for Chapter 11 protection on April 17, also elected for a dual-track sale-liquidation process. And retailer Toys R Us similarly chose the option for its 2017 Chapter 11 filing.

The dual-track, or “toggling,” strategy puts Bed Bath & Beyond in a more attractive position to potential bidders, said Elie Worenklein, a corporate restructuring attorney with Debevoise & Plimpton.

A customer walks into a Bed Bath & Beyond store in Novi, Michigan, U.S., January 29, 2021. REUTERS/Emily Elconin

A customer walks into a Bed Bath & Beyond store in Novi, Michigan, U.S., January 29, 2021. REUTERS/Emily Elconin

The stores can keep generating revenue from customers, while the company continues its marketing efforts to sell either all or a portion of its operations. Chapter 11 doesn’t require a company to shutter its doors.

In addition, Worenklein said, Chapter 11 permits

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