Although it is exploring an alternative deal that might keep at least some of its stores in operation, Big Lots announced that it does not anticipate completing an asset purchase agreement with Nexus Capital Management and will commence going-out-of-business sales.
If the company can salvage a purchase by Nexus under other terms or institute one with Gordon Bros., which expressed interest in a joint venture that would keep some stores open, Big Lots would complete any sale by early January.
In a Delaware bankruptcy court, the company asserted its belief that the GOB sales would not necessarily preclude it from effecting a going concern transaction. The shift to going out of business sales has begun and covers all remaining Big Lots store locations as the company seeks to protect the value of its estate.
Big Lots filed for Chapter 11 bankruptcy protection in early September and named Nexus as a stalking horse bidder for the company.
In announcing the deal failure, Bruce Thorn, Big Lots’ president and CEO, said, “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.”
According to Pulse Ratings, Big Lots attorneys told the court that Nexus had informed the company in early December that it needed more time to close the proposed sale as a minimum asset test was not satisfied. Nexus had concerns regarding Big Lots’ forward liquidity. When the deal didn’t go through by the debtor in possession closing deadline of December 13, Nexus maintained that it didn’t see a path to close by a December 31 outside date. Big Lots’ counsel stated that the company is in discussions with Nexus about an alternative going concern transaction, but it also received a going concern bid from Gordon Bros. Retail Partners. Pulse noted that Gordon Brothers told the court its bid includes a joint venture partner that is looking to operate as many as 400 of the now 870 Big Lots locations.
