Bed Bath & Beyond defaults on JPMorgan loan as bankruptcy fears rise

Bed Bath & Beyond defaulted on a key loan from JPMorgan Chase, adding to concerns that the struggling home improvement chain could soon go bankrupt.

In a securities filing Thursday, the New Jersey-based chain said its failure to make recent payments on its JP Morgan Chase line of credit “will force the company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.”

The Union, NJ company owes more than $1.1 billion to creditors as of Nov. 26, according to the filing.

The company also appointed restructuring adviser Carol Flaton to the board, the company said in a separate statement on Thursday. She will be paid $30,000 a month.

“The chance of filing for bankruptcy within the next 30 days is relatively high,” Dennis Cantalupo, chief executive of ratings firm Pulse Ratings, told Bloomberg.

Shares of Bed Bath & Beyond fell more than 22% to $2.52 on Thursday and rose about 2% on Friday morning.

The 52-year-old company has been rapidly reducing its real estate footprint in recent weeks, closing stores, renegotiating leases and laying off employees to cut costs. She reportedly owns BuyBuy Baby and is investigating store sales to raise money for bankruptcy proceedings.

But he also warned that “these measures may not succeed.”

The company’s suppliers are also backing down, delaying deliveries of goods and demanding payment in advance, fearing they won’t be returned.

Many stores are reportedly suffering from empty shelves even during the crucial holiday season.

Earlier this month, a home goods retailer dodged questions from Wall Street analysts after it reported a $393 million loss in the third quarter. According to data from Placer.ai, the company’s net sales fell 33% to $1.3 billion in the quarter, and traffic to its stores fell 23% in November compared to the same period in 2021.