Signage seen over an overturned shopping cart outside a Bed Bath & Beyond Inc. store. in Greendale, Wisconsin.
Daniel Aker Bloomberg Getty Images
Bed Bath and Beyond said there is not enough cash to pay down the debt and has defaulted on the line of credit with JP Morgan, warning once again of potential bankruptcy.
Shares of Bed Bath plunged Friday afternoon, prompting a brief trading halt. Shares were last down about 20%, giving the company a market value of about $300 million.
In a securities filing, the struggling home goods retailer “does not have sufficient resources to repay amounts under the Credit Facility and this will cause the Company to consider all strategic alternatives, including debt restructuring under the US Bankruptcy Code.”
Bed Bath owes $550 million in asset-backed loans with JP Morgan and $375 million in Sixth Street loans after expanding its credit facility in August last year.
Amid tough macro challenges, Bed Bath vendors tightened credit requirements and cut limits on requiring advance payments during the fiscal second quarter, which prevented the company from stockpiling inventory ahead of the holiday season, the filing said. Some vendors require prepayment, the company said.
Thursday’s update comes weeks after the retailer issued a notice of “going concern” that it may not be able to cover costs after a worse-than-expected quarter.
Bed Bath has been exploring options for the past few weeks. The retailer has been in discussions to finalize financing that would keep it going if it were to file for bankruptcy, CNBC previously reported.
The company is also in the process of being sold in hopes of keeping its namesake chain and the Buybuy Baby business alive. In addition, the company has prepared a potential Chapter 11 filing in the US Bankruptcy Court in New Jersey, CNBC previously reported.
This is a developing story. Check back for updates.