Big Lots files for bankruptcy and agrees to be acquired by private equity firm

Big Lots announced on Monday that it had filed for Chapter 11 bankruptcy to pay off its debts. The discount retailer cited inflation and high interest rates as reasons for the damage to its business.

The Columbus, Ohio-based company said it plans to sell its assets and the rest of its business to private equity firm Nexus Capital Management. The bankruptcy filing comes a month after Big Lots announced it would close its stores. up to 315 stores nationwide, further closures are imminent.

“While the majority of our stores are profitable, we intend to move forward with a more targeted profile,” Bruce Thorn, the retailer’s president and CEO, said in a statement.

The retailer’s regular customers have cut spending on household and seasonal products, which make up a large portion of Big Lots’ sales, the company said.

According to Neil Saunders, managing director of GlobalData, the bankruptcy of the chain, which had seen 16 consecutive quarters of declining sales, seemed inevitable. But he dismissed the notion that the retailer’s difficulties were solely due to the difficult economic environment.

“Big Lots doesn’t always offer good value. Many of the items sold there aren’t top-of-the-line and aren’t extremely expensive, but equivalent items can often be found much cheaper at other stores, including Walmart,” the analyst noted.

Another problem plaguing Big Lots is its “very confusing and confusing” product offering, which is turning customers off and degrading the shopping experience, Saunders added. But bankruptcy will give the retailer a chance to restructure its $573 million in long-term debt and rising interest payments, providing “assurance that the chain will survive in some form,” he said.

Big Lots has secured $707.5 million in financing commitments, including $35 million in new funds from some of its current lenders. If the bankruptcy court approves the financing, it is expected to provide sufficient liquidity to support the company as it works to complete the sale to Nexus Capital.

The chain also received a delisting notice from the New York Stock Exchange because the average closing price of its shares was below $1 over a period of 30 consecutive trading days. The notice does not mean that Big Lots’ shares will be delisted immediately, as the company can appeal.

— The Associated Press contributed to this report.