Discount retailer Big Lots filed for Chapter 11 bankruptcy protection on Monday in Delaware, listing $556 million in secured debt. The company plans to close more than 300 stores while pursuing a $620 million deal to sell its remaining business.

Financial Struggles and Overstock Issues

Big Lots, which experienced a surge in sales during the COVID-19 pandemic as consumers adapted to working from home, saw demand taper off as restrictions eased. To cope with the drop in sales, the company was forced to sell excess merchandise at significant markdowns, according to Jonathan Ramsden, Chief Financial and Administrative Officer.

Big Lots filed for Chapter 11 : Bankruptcy Plan and Stalking Horse Bid

Before filing for Chapter 11, Big Lots undertook a prepetition marketing process to explore strategic alternatives to stabilize its finances. As part of the bankruptcy proceedings, Nexus Capital Management LP has emerged as the stalking horse bidder, offering a $620 million baseline bid to acquire the company’s assets. This offer will be tested through the Chapter 11 process.

Big Lots also secured $707.5 million in debtor-in-possession financing from its existing lenders, with $35 million in new money lending to keep the business operational during bankruptcy.

Legal Representation and Court Assignment

The case has been assigned to U.S. Bankruptcy Judge J. Kate Stickles. Big Lots is represented by Morris Nichols Arsht & Tunnell LLP and Davis Polk & Wardwell LLP, with legal teams led by attorneys Robert J. Dehney Sr., Andrew R. Remming, Tamara K. Mann, and others.

As Big Lots navigates its Chapter 11 filing, the company will work toward restructuring its debts and securing a sale of its remaining assets, aiming to remain a going concern.