Half Of Big Lots Stores Could Be Saved In Variety Wholesalers Deal

Up to a half of Big Lots stores will be saved after it agreed to a transaction with Gordon Brothers Retail Partner that enables the transfer of Big Lots assets.

The close-out retailer, which filed for bankruptcy in September, said that these assets include its circa 800 remaining stores, its distribution centers and intellectual property.

Under the terms of the agreement, Variety Wholesalers, which operates more than 400 stores in the southeast and mid-Atlantic of the U.S. under the Roses, Roses Express, Maxway, Bill’s Dollar Stores, Super 10, Super Dollar and Bargain Town fascias, said that it intends to acquire between 200 and 400 Big Lots stores and up to two distribution centers.

The company plans to operate the acquired stores under the Big Lots brand, with the agreement coming as Big Lots continues to advertise store closing sales on its website for its approximate 800 locations nationwide.

Big Lots New Deal

The turnaround comes after Big Lots previously agreed to sell “substantially all” of its stores and business operations to Nexus Capital Management.

The closeout retailer filed for Chapter 11 bankruptcy protection as part of the proposed deal to be acquired for around $760 million by the private equity firm, which was acting as the stalking horse bidder. The proposed deal, which is subject to higher offers and other conditions, consisted of $2.5 million in cash plus remaining debt and had been expected to close in the fourth quarter.

Big Lots had been struggling with declining sales. It listed its assets and liabilities of $1 billion to $10 billion in its bankruptcy petition after first warning in June of its ability to survive as a “going concern.”

The deal was announced Tuesday, just days after the sale to Nexus Capital Management fell apart following creditor backlash. Several Big Lots vendors opposed the deal because it repays lenders while leaving trade creditors with steep losses.

Big Lots has already commenced going out-of-business sales at its more than 800 remaining stores and said it would launch a total liquidation of the business if the sale wasn’t approved.

Judge J. Kate Stickles said late Tuesday that she would approve a sale of the retailer to Gordon Brothers Retail Partners, while conceding that neither the sale to Gordon Brothers or a liquidation was ideal. However, she concluded that the sale is the best option available and maximizes the value of Big Lots’ assets in order to repay creditors.

Big Lots Stores Saved

Under the deal, Gordon Brothers will acquire Big Lots’ assets in exchange for repaying the retailer’s Chapter 11 loan plus as much as $17 million in oustanding rent and other fees and expenses related to the bankruptcy, according to court documents.

“The strategic sale to Gordon Brothers and the transfer to Variety Wholesalers is a favorable and significant achievement for Big Lots that reflects the tireless work and collective effort of our team,” Bruce Thorn, president and CEO, Big Lots said in a statement.

“This sale agreement and transfer present the strongest opportunity to preserve jobs, maximize value for the estate and ensure continuity of the Big Lots brand. We are grateful to our associates nationwide for their grit and resilience throughout this process,” he added.

The transaction is subject to approval by the bankruptcy court and other customary closing conditions.

“We are excited to partner with Gordon Brothers to provide a path forward for the Big Lots brand and hundreds of its stores,” said Lisa Seigies, president and CEO, Variety Wholesalers. “We look forward to working with members of the Big Lots team to realize the exciting opportunities ahead.”