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Bed Bath & Beyond Inc. said it doesn’t have the funds to repay its banks after they determined the retailer has defaulted on its credit lines, WSJ Pro Bankruptcy reported. The home-goods chain said Thursday it received a notice of default from JPMorgan Chase & Co. on Wednesday. The banks are calling for an immediate repayment of all outstanding loans under the credit agreement. The company has $550 million in loans outstanding from the banks led by JPMorgan, as well as $375 million from a facility provided by Sixth Street Partners, according to a securities filing. It had $154 million in unrestricted cash and equivalents in late November. As a result of the default, Bed Bath’s interest rate goes up by 2 percentage points, according to the filing, and it is required to put up cash collateral to back letters of credit, which are often tapped for payments to suppliers. The company has $186 million in outstanding letters of credit. Bed Bath & Beyond has racked up losses as its sales have plummeted, the result of a failed turnaround that swapped name brands such as KitchenAid mixers and Calphalon cookware for private-label goods that didn’t resonate with shoppers. The chain has had trouble stocking its stores after it fell behind on payments to suppliers.

The chapter 11 trustee for a collapsed United Furniture Industries Inc. was approved on Wednesday by a bankruptcy judge, the Winston-Salem (N.C.) Journal reported. Derek Henderson was selected as the trustee by a federal bankruptcy trustee after being signed off on by United and its creditors, led by Wells Fargo & Co. The chapter 11 motion approved on Jan. 18 for United gives the manufacturer the opportunity to direct the sale of its assets with the oversight of a trustee. United unexpectedly shut down Nov. 22, immediately ending employment and health insurance benefits for 530 Triad employees and about 2,700 companywide. Among its assets is the 850,000-square-foot production facility at 401 W. Hanes Mill Road in Winston-Salem. Wells Fargo filed a motion for chapter 7 liquidation of the manufacturer’s assets and the appointment of a bankruptcy trustee. The bank said in a Dec. 30 court filing requesting the chapter 7 liquidation of United that it is owed $99.21 million in secured debt. However, the bank acknowledged it “estimates that any recoveries from liquidation of (United’s) collateral will result in a recovery equal to a fraction of this amount.”

Retailers, faced with sky-high demand from shoppers during the pandemic, spent the past three years ramping up their operations in areas like human resources, finance and technology. Now, times have changed, the New York Times reported. A public that rushed to buy all sorts of goods in the earlier parts of the pandemic is now spending less on merchandise like furniture and clothing. E-commerce, which boomed during lockdowns, has fallen from those heights. And with consumers worried about inflation in the prices of day-to-day necessities like food, companies are playing defense. Saks Off 5th, the off-price retailer owned by Hudson Bay, laid off an unspecified number of workers on Tuesday. Saks.com is laying off about 100 employees, or 3.5 percent of its workers. Stitch Fix laid off 20 percent of its salaried workers this month and closed a distribution center in Salt Lake City. Last week, Wayfair said it would lay off 1,750 people, or 10 percent of its work force, and Amazon started laying off 18,000 workers, many of them in its retail division. Bed Bath & Beyond cut its work force this month as it tries to shore up its finances and prepares for a possible bankruptcy filing. While it’s not unusual for major retailers to announce store closings and some job cuts after the blitz of the holiday season, the recent spate of layoffs is more about structural changes as the industry recalibrates itself after the rapid growth from pandemic-fueled shopping. And it accompanies broader worries about the state of the U.S. economy and layoffs by prominent tech companies.

Brazilian shopping chain Americanas SA yesterday filed for chapter 15 bankruptcy, a move that protects its U.S. assets while insolvency proceedings play out in its home country, Bloomberg News reported. The retailer nosedived in January after becoming mired in an accounting scandal. The firm, backed by billionaire Jorge Paulo Lemann, filed for bankruptcy at a court in Rio de Janeiro on Jan. 19. In disclosures to investors, the firm implied it misreported numbers connected to some of its financing and wrongly deducted interest paid to lenders from its liabilities. In all, there were nearly $4 billion of accounting “inconsistencies,” according to a regulatory filing.

United Furniture can shift into chapter 11 bankruptcy as it had requested, a federal bankruptcy judge ruled on Wednesday, the Northeast Mississippi Daily Journal reported. Judge Selene Maddox with the U.S. Bankruptcy Court in the Northern District of Mississippi heard testimony last week regarding United/Lane Furniture's motion to move from chapter 7 to a chapter 11 bankruptcy. In late December, Wells Fargo and two other creditors told the bankruptcy court United owed them nearly $100 million. They were pushing for United to file chapter 7, a total liquidation of the company's assets so that they could recoup what's owed. Judge Maddox ruled that United cannot oversee its own liquidation and has requested the appointment of a special independent chapter 11 bankruptcy trustee to oversee the process. United shut down its operations on Nov. 22. The move left some 2,700 workers in three states, including approximately 1,100 in Northeast Mississippi, without work or benefits. United's Mississippi facilities are in Amory, Belden, Hatley, Nettleton, Okolona, Vardaman, Verona and Wren. The company also had six plants in North Carolina and one in California.

Party City Holdco Inc. won approval to borrow $75 million after its bankruptcy judge settled a fight among creditors including Mudrick Capital Management, Bloomberg News reported. Bankruptcy Judge David R Jones in a hearing yesterday said he would approve the loan, which is the first draw of a proposed $150 million financing package. The cash will allow the beleaguered party supplies retailer to keep paying employees and vendors while working on a plan to restructure more than of $1.4 billion of debt. Mudrick, a Party City creditor, objected to the financing because in order to participate in the deal — the debt bears interest at more than 14% and comes with potentially lucrative fees — the hedge fund would have been required to fully support a restructuring plan proposed by a majority first-lien noteholder group that includes Capital Group Cos Inc. and Silver Point Capital. Judge Jones overruled Mudrick’s objection, but asked the majority noteholder group to let Mudrick participate in the financing while reserving its right to oppose the restructuring proposal at a later date. The creditor group agreed to the adjustment.

U.S. retail sales fell more than expected in December, pulled down by declines in purchases of motor vehicles and a range of other goods, putting consumer spending and the overall economy on a weaker growth path heading into 2023, Reuters reported. Retail sales fell 1.1% last month. Data for November was revised to show sales dropping 1.0% instead of 0.6% as previously reported. It was the second straight monthly decline. Higher borrowing costs as the Federal Reserve battles inflation are also weighing on retail sales as goods tend to be financed on credit. Retail sales were also likely hurt by a cold snap in December as well as lower gasoline prices, which impacted on receipts at service stations. In addition, spending is shifting back to services. Sales at auto dealers fell 1.2%. Receipts at service stations tumbled 4.6%. Online retail sales dropped 1.1%. Furniture stores sales plummeted 2.5%. Receipts at food services and drinking places, the only services category in the retail sales report, fell 0.9%. Electronics and appliance store sales declined 1.1%. Clothing stores sales fell 0.3%. There were also decreases in receipts at general merchandise stores.

Party City Holdco Inc. filed for chapter 11 protection yesterday, making it the latest casualty in the U.S. retail industry as persistently high inflation takes a toll on consumer spending, Reuters reported. Woodcliff Lake, New Jersey-based Party City said it had reached a pre-negotiated agreement with a bondholder group to support an "expedited restructuring" that is expected to be completed in the second quarter. It reported $1 billion to $10 billion of estimated assets and liabilities, and said it had obtained $150 million in debtor-in-possession financing to support its operations. The party supplies retailer's fortunes have dwindled since the COVID-19 pandemic as it wrestled with slowing sales due to lockdowns and store closures, along with inventory shortages and tight supplies of helium due to global supply chain disruptions. The company, which operates more than 800 company-owned and franchise stores throughout North America, also battled higher freight, labor and raw materials costs as it pulled forward shipping timelines to ensure enough products on its shelves. Its subsidiaries outside of the United States, its franchise stores, and its Anagram business were not part of the bankruptcy proceedings, the company said, adding that its stores would continue to remain open.

Performance Powersports Group Inc., a wholesale supplier of dirt bikes, all-terrain vehicles and golf carts, has filed for bankruptcy, with a lender and investor planning to serve as lead bidder while the private-equity-backed company seeks better offers, WSJ Pro Bankruptcy reported. The Tempe, Ariz.-based vehicle dealer, backed by investment firm Kinderhook Industries LLC, said it has been hurt by supply-chain disruptions, higher freight costs and a reduction in customer demand. The company sells its vehicles to customers including Tractor Supply Co., Lowe’s Cos. and Walmart Inc., according to a filing on Monday in the U.S. Bankruptcy Court in Wilmington, Del. Performance Powersports, which sells products under brands that include Coleman, also said it has been in an inventory dispute with a key vendor, Chongqing Huansong Industries (Group) Co. Ltd. A delay in vehicle delivery by the China-based vendor caused 2021 holiday sales to suffer, Performance Powersports said. Chongqing Huansong is listed as the largest unsecured creditor, with a $58 million claim. Performance Powersports has debt of more than $120 million, according to its court filing.