Big Lots strikes deal to save stores, prevent fire from closing

On December 29, 2024By Littum

(Bloomberg) — Bankruptcy Big Lots Inc. has struck a deal to save hundreds of stores after an earlier sale of the business fell apart, saving the chain from closing entirely.

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The company said Friday it has agreed to a transaction with Gordon Brothers Retail Partners LLC that will facilitate the transfer of Big Lots’ brand, stores and distribution centers to other operators. The proposed transaction would avert the potential closure of all Big Lots locations following an earlier deal to sell the company to Nexus Capital Management LP that was resolved earlier this month.

Big Lots said Variety Wholesalers Inc., which operates several discount chains in the Southeast and Mid-Atlantic region, intends to acquire between 200 and 400 locations as part of the transaction, the company said. Variety Wholesalers intends to continue to operate stores under the Big Lots name and “may employ Big Lots employees in the acquired stores and distribution centers, as well as certain corporate employees needed to support the footprint going forward,” 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 people when it filed for Chapter 11 in September and had spent months working with Nexus. But the deal unraveled after a valuation of the company’s inventory came in 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 selling off-site 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 in a statement Friday that the deal with Gordon Brothers and Variety Wholesalers was the company’s best option to save jobs, maximize the value of its assets and continue the Big Lots brand.

The case is Big Lots Inc., number 24-11967, in the US Bankruptcy Court for the District of Delaware.