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Bed, Bath & Beyond admits it can't pay its debts and is heading for bankruptcy


The company began to default on its financial obligations on January 13 and is trying to renegotiate its store leases, seek additional debt or equity

The home company Bed, Bath & Beyond has filed its quarterly report with the United States Securities and Exchange Commission (SEC) on Thursday.

As annexes are the contracts of its interim CEO, Sue Gove, and its interim CFO, Laura Crossen.

Gove will receive a fixed salary of $1.4 million, a bonus of up to 150% of that figure, $2.7 million in stock incentives, plus expenses and other benefits.

Crossen starts with $712,500 plus bonuses, expenses and add-ons.

They will not have an easy job.

The figures contrast with the situation of the company, which in the same report openly acknowledges that it cannot pay its debt and that it is considering filing for bankruptcy.

"At this time, the company does not have sufficient resources to repay the amounts of the credit lines, which will lead it to consider all strategic alternatives, including restructuring its debt under the United States Bankruptcy Code," says the report.

The company explains that it is carrying out a series of actions to improve its financial situation and stabilize the results of its operations.

These measures include cutting costs, reducing investment and reducing the number of stores and distribution centers.

In addition, it is trying to renegotiate its store leases, seek additional debt or equity, reschedule its business activities and strategic initiatives, or sell assets.

But make no mistake: "These measures may not be successful."

The company founded in 1971 in New Jersey and which was among the favorites for wedding lists and for those who became independent and set up a new home, has entered a vicious circle.

The entities do not give it credit, some suppliers require advance payment and this has led the company to have less merchandise than appropriate during the Christmas season, the strongest from a commercial point of view, in which some shelves were empty.

The collapse in sales makes it impossible to generate cash and meet financial obligations, which generates more mistrust and starting over.

The company began to default on its financial obligations on January 13.

This Wednesday, as reported, he received a notification of debt acceleration and late-payment interest from JPMorgan Chase Bank, as the agent bank of his credit agreement when the default occurred.

This makes the principal amount of all loans outstanding under the lines of credit, along with interest earned thereon, other premiums and obligations, immediately due and payable.

Upon such notification, the company is obliged, with immediate effect, to guarantee the obligations in cash.

In addition, all outstanding loans and obligations under that agreement will accrue interest at an additional late-payment interest rate of 2% per annum.

Technical bankruptcy

Bed, Bath & Beyond indicates that, as of November 26, the closing date of its fiscal quarter, it had a little more than 1,100 million dollars outstanding in different loans and lines of credit that are affected.

The total financial debt exceeds 2,000 million dollars and the balance sheet shows a company in technical bankruptcy, with a hole of almost 800 million dollars at that date.

Total liabilities are $5.2 billion and assets are $4.4 billion, although many can lose value quickly.

The losses and the strong destruction of cash will have foreseeably aggravated the situation in the two months that have elapsed since the date of that balance sheet.

On the stock market, the company goes from collapse to collapse.

This Thursday the price has fallen by 22% and the company is already worth less than 300 million dollars.

In the last 12 months it has fallen more than 80%.

In early January, Bed Bath & Beyond already said in a statement that it had "concluded that there were substantial doubts about its ability to continue as a going concern."

At the same time that it registered the contracts of its executives, the company has announced in another communication to the SEC that it has appointed Carol Flaton as an independent director, specializing in restructuring at the consultancy AlixPartners and also at Lazard bank.

Bed, Bath & Beyond says she will pay him $30,000 a month.

And also, that she will collect them in advance.

Source: elparis

All business articles on 2023-01-27

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