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.
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.
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.