Bed Bath & Beyond Inc. won permission on Monday to tap $40 million, money the retailer said it needs to cover payroll for its roughly 14,000 employees and buy management time to try and locate a buyer in chapter 11 bankruptcy to rescue some or all of its stores, Bloomberg News reported. Bankruptcy Judge Vincent Papalia in a hearing yesterday said the urgent funding provided by Bed Bath & Beyond’s lenders averts a potential “fire sale” and immediate liquidation of the 52-year-old retail chain. The financing approved Monday includes a May 28 deadline for bids on the company’s assets. But the money comes at a cost to junior creditors: in exchange for the $40 million, Bed Bath & Beyond agreed to roll-up $200 million in existing debt, moving that debt to the front of the chapter 11 repayment line. The retailer said in its bankruptcy petition it had roughly $4.4 billion in assets compared to more than $5.2 billion in total debt as of last year. Lawyers for lenders Sixth Street Specialty Lending Inc. and JP Morgan Chase Bank N.A. defended the roll-up, saying lenders went to extraordinary lengths to provide Bed Bath & Beyond runway as it pursued last-ditch equity raises in an ultimately failed attempt to avoid bankruptcy.
