A NEW proposal to prevent Big Lots from shutting all its stores is at risk following complaints from some creditors that stand to incur losses in the troubled retailer’s bankruptcy.
The company on Dec 27 unveiled a proposal to sell the business to Gordon Brothers Retail Partners, which in-turn has offered to transfer 200 to 400 Big Lots locations to Variety Wholesalers.
Some lawyers for Big Lots landlords and vendors said during a Monday (Dec 30) court hearing that they had not been given enough time to adequately review the agreement’s terms. They also expressed scepticism that the deal can be consummated.
But Big Lots lawyer Adam Shpeen said the proposal is the only option the retailer has to avoid liquidation. He added the transaction needs to close this week for the company to remain viable.
An attorney representing some vendors also said on Monday they intend to ask the bankruptcy court to liquidate the chain.
Judge J Kate Stickles was scheduled to consider approving the Gordon Brothers deal on Monday, but that is now set for Tuesday morning in light of the creditor opposition. “It’s an unfortunate situation,” she said. The judge encouraged lawyers for Big Lots, Gordon Brothers and the creditors to continue negotiations on Monday evening.
Big Lots, which operated more than 1,300 locations when it filed Chapter 11 in September, is conducting going-out-of-business sales at most of its stores.
The Gordon Brothers agreement was announced a week after after a deal for Nexus Capital Management to acquire Big Lots unravelled. Gordon Brothers would acquire Big Lots’ assets in exchange for repaying the retailer’s Chapter 11 loan plus as much as US$17 million in unpaid rent and other fees and expenses related to the bankruptcy, according to court documents. BLOOMBERG
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