Bed Bath & Beyond strengthens legal team ahead of potential New Jersey bankruptcy filing

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A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, January 6, 2023.

Johnny Milan | Bloomberg | Getty Images

Bed bath & beyond is expanding its team of legal counsel as the troubled retailer prepares a possible bankruptcy filing that will take place in New Jersey in the coming weeks, according to people familiar with the matter.

The company hired law firm Cole Schotz to assist with a possible filing with the US Bankruptcy Court in the New Jersey District, according to people who were not authorized to speak publicly on the matter. However, the situation remains volatile and plans may change, people added.

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Bed Bath has been in talks to secure financing that would keep it afloat should it file for bankruptcy, UKTN previously reported. The company is also in the middle of a sale process in hopes of keeping its namesake chain and Buybuy Baby company alive.

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Still, the Union, New Jersey-based retailer is headed for bankruptcy in its home state, an increasingly popular location for Chapter 11 cases, the people said.

Earlier this week, fellow retailer Party town filed for Chapter 11 bankruptcy protection with plans to restructure the balance sheet and move forward with a smaller retail footprint. That filing was filed with the US Bankruptcy Court in the Southern District of Texas.

A spokeswoman for Bed Bath said the company is not commenting on speculation or specific relationships, saying only that it has been working with advisors to regain market share and explore multiple avenues.

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“We have a team, internally and externally, with proven experience in helping companies successfully navigate complex situations and grow stronger,” the spokeswoman said in a statement.

A representative for Cole Schotz did not respond to requests for comment.

The retailer is working with other advisors, including Kirkland & Ellis, the law firm known for representing bankrupt companies, as it navigates its financial woes. Kirkland & Ellis and Cole Schotz also act as legal advisors to cryptocurrency lender BlockFi, which has filed for Chapter 11 bankruptcy protection in New Jersey bankruptcy court.

Bed Bath also recently hired consulting firm AlixPartners as one of its advisors, replacing Berkeley Research Group, UKTN previously reported.

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Despite efforts to avoid bankruptcy protection, filing is likely to be filed in the coming weeks, the people said.

Earlier this month, Bed Bath warned of imminent bankruptcy as plans for a turnaround failed to improve the company and its balance sheet deteriorated. The retailer is struggling with a heavy burden of debt, declining sales and mounting losses.

On Thursday, Bed Bath said it received a notice from the Nasdaq Stock Market that it was not in compliance after it failed to file its quarterly earnings on time. The company said it is working to complete and submit its report to restore compliance within 60 days.

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