Big Lots Agrees to Bankruptcy in Nexus Capital Management Deal

Over the last couple of months, Big Lots has been closing stores and restructuring its business. Now, the discount retailer has initiated Chapter 11 bankruptcy protection proceedings while it secures a deal with Nexus Capital Management.

Big Lots’ core customers, generally lower-income households, have been hit hard with inflationary pressure, and many have stopped buying home and seasonal products, which contribute substantially to the company’s bottom line. While the company has taken steps to improve its long-term performance, management became concerned over its ability to remain profitable as losses kept piling up.

As a result, Big Lots decided that searching for a buyer would be the best way forward. Nexus Capital Management LP stepped in and has offered to buy Big Lots’ assets and ongoing business operations. The purchase deal required Big Lots to request bankruptcy protection. However, other potential buyers have until Oct. 15 to come forward and make better offers.

Around 295 Big Lots locations are currently in the process of closing. The first round of closures started in July, with a second round initiated in August. While there is no official number of stores being shuttered, Big Lots will continue to close more stores over the next few months. Workers at these locations will likely lose their jobs.

“Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers,” said Big Lots CEO Bruce Thorn in a press release. “To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner.”

Big Lots owes between 5,001 and 10,000 creditors roughly $3.1 billion, according to filed documents. Current assets are valued at $3.18 billion. With court approval, Big Lots intends to meet all business commitments, including paying employees and vendors. To keep operations open and continue serving customers, Big Lots secured $707.5 million in financing, $35 million of which is from current lenders.