Bed Bath & Beyond revealed that it has defaulted on a key loan from JPMorgan Chase, adding to concerns that the struggling home-goods chain may soon be headed for bankruptcy.
In a securities filing on Thursday, the New Jersey-based chain said its failure to make recent payments on its credit line with JP Morgan Chase will “lead the company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.”
The Union, N.J.-based company owes creditors more than $1.1 billion as of Nov. 26, according to the filing.
It also appointed a restructuring advisor, Carol Flaton, to its board the company said in a separate filing on Thursday. She’ll be paid $30,000 per month.
“The likelihood of a bankruptcy filing within the next 30 days is relatively high,” Dennis Cantalupo, chief executive of credit rating firm, Pulse Ratings told Bloomberg.
On Thursday, Bed Bath & Beyond’s shares dropped by more than 22% to $2.52 on and its up about 2% on Friday morning.
In recent weeks, the 52-year-old company has been rapidly shrinking its real estate footprint, closing stores and renegotiating leases and laying off employees to lower costs. It owns BuyBuy Baby and has been exploring deals to sell the stores to raise money for a bankruptcy process, according to reports.
But it also warned “these measures may not be successful.”
The company’s vendors have also been pulling back, withholding shipments of goods and demanding payment upfront for fear that they won’t be repaid.
Many stores are suffering from bare shelves, even during the crucial holiday season, according to reports.
Earlier this month the home goods seller ducked Wall Street analysts questions after it reported a $393 million third quarter loss. It’s net sales fell 33% to $1.3 billion in the quarter and foot traffic to its stores dropped by 23% in November from the same period in 2021, according to data from Placer.ai.
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