Household goods chain Big Lots has been granted a reprieve to keep hundreds of its stores open after a bankruptcy judge approved a last-minute sale to a new owner, according to reports.
U.S. Bankruptcy Court Judge Kate Stickles said at a court hearing Tuesday in Wilmington, Delaware, that the proposal was the best option after an initial bankruptcy agreement fell apart last month. The green light was given for the sale of ~400 stores.
Just after Christmas, the Columbus, Ohio-based home goods chain said it had reached an agreement with Gordon Brothers Retail Partners to sell its stores, distribution centers and intellectual property to a retailer that could take over the business. Announced.
As part of the partnership, Variety Wholesalers will take over 200 to 400 Big Lots stores and retain 5,000 to 10,000 jobs, Big Lots said.
Financial terms of the sale were not disclosed.
Big Lots did not respond to a request for comment.
The court's decision came days after Mitch Modell, the former chief executive of Modell, the famous New York sporting goods chain that went bankrupt four years ago, said he wanted to save Big Lots.
The 70-year-old is seeking to raise $1 billion to buy Big Lots and fellow bankrupt retailer Party City, the Post reported Monday.
Big Lots, which had 1,300 stores and more than 27,000 employees when it filed for bankruptcy in September, had announced plans to sell the business to private equity firm Nexus Capital.
But last month, Big Lots revealed that the deal had fallen through. The discount retailer has launched a “going out of business” sale at its remaining 900 stores after already closing about 400 stores in 2024.
The 11th-hour deal with Gordon Brothers won't generate enough money to fully repay Big Lots' vendors, including mattress makers Tempur Sealy and Serta Simmons.
Both brands continued to sell products to Big Lots even after filing for bankruptcy.
Many vendors opposed the sale, arguing that Gordon Brothers should not be able to acquire Big Lots' assets without providing adequate support to the vendors.
Beth Rogers, Serta's attorney, said Tuesday that Big Lots continued to order furniture after finding out it couldn't repay vendors, resulting in $250 million in new debt.
Tempur Sealy and Serta did not respond to requests for comment.
When Big Lots filed for bankruptcy, it was the nation's fourth-largest home goods retailer. The company generated revenue of $4.7 billion in 2023.
But Big Lots, like other home goods retailers such as Cone's, Home Depot and Lowe's, saw sales decline as cash-strapped customers delayed home improvement projects and a tough housing market weighed on home sales. It is struggling with declines, which means that new homes require less new furniture.
Financial pressures ultimately caused Big Lots, which was already $556.1 million in debt, to go under water.
