Bed, Bath & Beyond discloses loan defaults, weighs bankruptcy

Bed Bath & Beyond (BBBY) stock cratered Thursday after the embattled retailer revealed in a new regulatory filing it was hit with a default notice from JPMorgan and does not have adequate funds to repay its loans.

This coming while the company again warned it may be forced to seek bankruptcy protection amid its ongoing financial struggles.

Shares of the company fell as much as 33% on Thursday afternoon, at one point prompting a brief halt. The stock closed Thursday’s session off 22%. Though well off its early January lows closer to $1.30 per share, the stock is still trading near its lowest levels since 1993.

“On or around January 13, 2023, certain events of default were triggered under the Company’s Credit Facilities as a result of the Company’s failure to prepay an overadvance and satisfy a financial covenant, among other things,” the company said in its quarterly 10-Q filed with the SEC on Thursday. Bed, Bath & Beyond added that on Jan. 25, JPMorgan notified the company it owed the bank money Bed, Bath & Beyond doesn’t have.

“At this time, the Company does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code,” the company said. Across its outstanding credit facilities, Bed, Bath & Beyond owes its lenders approximately $2.2 billion.

Earlier this month, Bloomberg News reported the company was in talks with potential lenders that would help finance bankruptcy proceedings.

“As we consider all paths and strategic alternatives, we continue to work with our advisors and implement actions to manage our business as efficiently as possible,” a spokesperson for Bed Bath & Beyond told Yahoo Finance on Thursday. “As is our practice, we do not comment on speculation. We will update all stakeholders on our plans as they develop and finalize.”

Earlier this month, Bed Beth & Beyond reported sales dropped over 30% in its fiscal third-quarter ended Nov. 26. The company said those numbers reflected “lower customer traffic and reduced levels of inventory availability, among other factors.”

Bed, Bath & Beyond also announced plans to close additional stores earlier this month, bringing its total planned closures to 122 as it works towards shuttering 150 locations in total.

“The Company is undertaking a number of actions in order to improve its financial position and stabilize its results of operations including but not limited to, cost cutting, lowering capital expenditures, and reducing its store footprint including related distribution centers,” Bed, Bath & Beyond said in Thursday’s filing.

“In addition, the Company will continue to seek reductions in rental obligations with landlords in its determination of the appropriate footprint, seek additional debt or equity capital, reduce or delay the Company’s business activities and strategic initiatives, or sell assets. These measures may not be successful.”