Here’s How Big Lots Was Able to Save 400 Stores Despite Filing for Bankruptcy

Big Lots has managed to save up to 400 stores in the 11th hour after striking a deal with Gordon Brothers and Variety Wholesalers. This deal has saved the former retail giant from completely liquidating its assets. Let’s take a look at the details of this save.

Big Lots’ 11th-Hour Deal

According to USA Today, 200 to 400 Big Lots locations were moved to Variety Wholesalers, Inc. as part of a deal the retailer struck with Gordon Brothers Retail Partners, an asset liquidation company based in Boston.

With over 400 locations throughout the Mid-Atlantic and Southeast, Variety Wholesalers is based in Hendersonville, North Carolina. Roses, Roses Express, Bargain Town, Maxway, and Bill’s Dollar Stores are some of its chains.

Variety Wholesalers may hire current staff at the stores and the one or two distribution centers it intends to purchase, according to a news release from the firms. It intends to run the stores it has acquired under the Big Lots brand.

“The strategic sale to Gordon Brothers and the transfer to Variety Wholesalers is a favorable and significant achievement for Big Lots that reflects the tireless work and collective effort of our team,” CEO Bruce Thorn said in a statement. “This sale agreement and transfer present the strongest opportunity to preserve jobs, maximize value for the estate and ensure continuity of the Big Lots brand. We are grateful to our associates nationwide for their grit and resilience throughout this process.”

According to the companies, the deal involves the transfer of assets such as retail locations, distribution hubs, and intellectual property. The bankruptcy court has to approve the agreement; however, there is no indication that the deal will not be approved.

Bankruptcy Filing

Earlier this month, the company announced plans to close all its stores after a deal with Nexus Capital Management, which was struck up in September, fell through.

In pursuit of “an alternative going concern transaction with Nexus or another party,” the business will keep working. The company’s objective was to close any sales by the beginning of January 2025, according to the release.

To “protect the value of its estate,” Big Lots started holding going-out-of-business sales at all of its locations in the meantime. The business claimed that lowering shop prices wouldn’t prevent any future sales to outside parties.

Thorn stated in the release, “We all have worked extremely hard and have taken every step to complete a going concern sale. While we remain hopeful that we can close an alternative going concern transaction, in order to protect the value of the Big Lots estate, we have made the difficult decision to begin the GOB process.”

Nexus Capital Management and Big Lots attempted to negotiate an asset acquisition agreement, but according to Bloomberg, Nexus Capital Management was unable to make the sale financially feasible after a valuation estimate of the bankrupt company’s goods came in below expectations.

Bloomberg reported that “an official committee of unsecured creditors on Monday demanded that the company either pay tens of millions of dollars in back rent, or be liquidated by a court-approved trustee. US Bankruptcy Judge J. Kate Stickles is scheduled to hear a status report on that dispute and the Nexus sale during a court hearing.”

Sales at Big Lots have been dropping for years. Despite the numerous discounts the business offered its consumers through its loyalty program, rising inflation has increased their financial hardship and prevented them from visiting the stores.

The closeout shop declared bankruptcy in September. Prior to this last drive to close all remaining retail locations, four rounds of store closures were announced in the months that followed.

According to a press release, Big Lots released a new app in November “to enhance the shopping experience for its valued customers. ” Although the app was intended to encourage users to visit the stores, it did not work as planned.