Struggling Retailer Files for Bankruptcy, Finds Buyer for $760 Million Purchase

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Big Lots, the Columbus, Ohio-based retailer, has filed for Chapter 11 bankruptcy protection, citing up to $10 billion in debt. On September 9, the company announced a deal with Nexus Capital Management LP, an affiliate that plans to acquire Big Lots for $760 million. This acquisition includes $2.5 million in cash, with the remaining amount addressing the company's outstanding debts and liabilities.

In its bankruptcy filing, Big Lots reported assets and liabilities both ranging between $1 billion and $10 billion. Despite the financial strain, Big Lots' CEO, Bruce Thorn, expressed optimism, stating that this move allows the company to restructure under new ownership, stabilize its finances, and focus on improving its operations. "The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability," Thorn said.

Nexus Capital Management, based in Santa Monica, California, has a diverse investment portfolio and sees potential in reviving Big Lots. Nexus Managing Director Evan Glucoft referred to Big Lots as an “iconic brand” and aims to restore it as “America’s leading extreme value retailer.”

One of the key challenges Big Lots faces is regaining its competitive edge in pricing. The company has already begun refocusing on extreme bargain deals, pushing closeout sales to 50% of its revenue for this year, up from 28% in the first quarter.

As part of its bankruptcy restructuring, Big Lots will be auctioned, with Nexus Capital Management serving as the stalking horse bidder. If Nexus secures the deal, the acquisition could be finalized in the fourth quarter of 2024.

In addition to the acquisition plan, Big Lots has secured $707.5 million in new financing. However, the company has acknowledged that additional store closures are imminent as it continues to review its retail footprint. Up to 315 stores nationwide could be shut down, with 25 stores in Florida already slated for closure. The retailer also announced the closure of its west Columbus distribution center, resulting in the loss of 379 jobs.

Despite these challenges, Big Lots will keep its profitable stores, which represent roughly 70% of its over 1,400 locations, open. For customers, operations will continue as usual in stores that are not closing, and the company has established a website where customers, vendors, and investors can track the bankruptcy process and sale updates.

Big Lots' financial difficulties have also impacted its stock performance. The New York Stock Exchange has notified the company that it is not in compliance with listing regulations due to its stock price averaging below $1 over the past 30 days. While the company has not been delisted, it expects the NYSE to suspend trading, pushing its stock to the Over-the-Counter market.

As the bankruptcy case unfolds, Big Lots aims to emerge as a more streamlined and financially stable entity, with Nexus Capital Management steering its revival and growth.