(Bloomberg) -- Bankrupt Big Lots Inc. has struck a deal to save hundreds of stores after an earlier sale of the business fell apart, saving the chain from closing down entirely.
The company said Friday it has agreed to a transaction with Gordon Brothers Retail Partners LLC that will facilitate the transfer of Big Lots’ brand, stores and distribution centers to other operators. The proposed transaction would avert the potential closing of all Big Lots locations after an earlier deal to sell the business to Nexus Capital Management LP unraveled earlier this month.
Big Lots said Variety Wholesalers Inc., which operates several discount chains in the Southeast and mid-Atlantic region, intends to acquire between 200 and 400 locations as part of the transaction, the company said. Variety Wholesalers intends to keep operating stores under the Big Lots name and “may employ Big Lots associates at the acquired stores and distribution centers, as well as certain corporate associates needed to support the go-forward footprint,” the retailer said.
The proposed transaction is subject to certain closing conditions and must be approved by a bankruptcy judge. Big Lots is scheduled to next appear in Delaware bankruptcy court on Monday.
Big Lots operated more than 1,300 locations and employed more than 27,000 workers when it filed Chapter 11 in September and had spent months working with Nexus. But the deal unraveled after an appraisal of the company’s inventory was lower than expected, making the economics of the sale to Nexus no longer viable, Bloomberg News reported.
The company subsequently announced in bankruptcy court that it would begin going out-of-business sales at about 870 locations and advisers worked to find an alternative transaction to save hundreds of Big Lots stores. Judge J. Kate Stickles, who is overseeing the Chapter 11 case, had warned lawyers that Big Lots had little time to find a new transaction.
Big Lots President and CEO Bruce Thorn said in a statement Friday that the deal with Gordon Brothers and Variety Wholesalers was the company’s best opportunity to save jobs, maximize the value of its assets and continue the Big Lots brand.
The case is Big Lots Inc., number 24-11967, in the US Bankruptcy Court for the District of Delaware.
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