Carvana Co. has adopted a "poison pill" to limit shareholders from raising their stakes and has reached an agreement to sell up to $4 billion of auto loans, the struggling used car retailer said yesterday, Reuters reported. Ally Bank and Ally Financial will buy the loans, the company said, giving Carvana a fresh source of funding as it tries to restructure its operations. Carvana said the "poison pill" will help safeguard its "significant" U.S. federal net operating loss (NOLs) that could be available to offset its future taxable income. The company's ability to use the NOLs would be substantially limited if its 5%-shareholders increased their ownership, Carvana said.
The unraveling of Bed Bath & Beyond Inc. could unlock one of the company’s strongest businesses: the Buybuy Baby chain of stores selling strollers, cribs and other infant gear, the Wall Street Journal reported. Bed Bath, which is preparing for a bankruptcy filing, has been in discussions with private-equity firm Sycamore Partners and another suitor about a deal to sell the baby chain as part of its chapter 11 restructuring. While sales at both chains are shrinking, the smaller baby business has held up better than the home goods chain. The company is still opening new Buybuy Baby stores, even as it closes 150 of its namesake locations and moves to preserve cash. As of February 2022, the company had about 770 Bed Bath & Beyond stores and about 130 Buybuy Baby locations. The Buybuy Baby business has drawn more interest than the core Bed Bath & Beyond business, the people said, and some discussions with potential suitors have centered around keeping the Buybuy Baby locations intact while determining another path forward for Bed Bath & Beyond. It’s unclear what that could look like.
A bankruptcy judge will rule on Wednesday on whether to approve the chapter 11 protection motion of United Furniture Industries Inc., the Winston-Salem (N.C.) Journal reported. Bankruptcy Judge Selene Maddox conducted a hearing on Friday on United Furniture's chapter 11 motion which would focus foremost on how the sale of its assets would be handled. Judge Maddox chose not to address the chapter 7 liquidating motion filed on Jan. 6 by Wells Fargo & Co., United Furniture's largest creditor. Judge Maddox took Friday's presentations "under advisement," pending issuing a bench ruling at 4 p.m. on Wednesday. Judge Maddox also chose to reset Wells Fargo's motion for an interim bankruptcy trustee pending a ruling on the United Furniture motion. The United Furniture motions are the company's first formal legal response since it unexpectedly shut down on Nov. 22.
Carvana Co. CVNA -12.58%decrease; red down pointing triangle is further cutting staff and facing a deeper slowdown in sales as it tries to reduce costs and conserve cash to stay current on more than $7 billion of debt, employees and industry analysts said, the Wall Street Journal reported. The online used-car seller is quietly terminating employees, cutting hours and letting open positions go unfilled. Several operations teams are working fewer than 30 hours a week or four-day workweeks, the emails said. Carvana laid off 4,000 employees last year, nearly a fifth of its staff, after growth slowed from a torrid pace during the pandemic. Carvana’s sales are declining sharply and it has fewer cars listed on its website, according to data collected by JXCE LLC, which scrapes the listings on Carvana’s site to track its sales and inventory. Meanwhile, Carvana’s inventory is steadily losing value as used-car prices pull back from pandemic highs.
Bed Bath & Beyond Inc. may find it hard to justify making coming interest payments of roughly $28 million as its cash dwindles, WSJ Pro Bankruptcy reported. The coming payments, due Feb. 1, are the next big hurdle the beleaguered housewares retailer faces as it looks for ways to keep its business going. Bed Bath & Beyond has coupons due on all of its $1.2 billion in bonds outstanding as of August, and while it has more than enough cash on hand to make the payments, it will face a difficult choice between staying current on its debts and conserving its cash as it charts its future course. The housewares retailer, which warned last week it may have to file for bankruptcy, burned over $300 million in cash in the quarter ended Nov. 26 and reported having $500 million in cash and credit lines to draw on for additional funds. If it does miss the interest payment, Bed Bath & Beyond will have a 30-day grace period during which it can come forward with funds before the company would be considered as being in default and before its bondholders and other creditors can take legal action. Bed Bath has said it is exploring raising debt or equity, as well as filing for bankruptcy. On Tuesday, the company said it is planning to make up to $100 million in cost cuts, including through layoffs.
Forma Brands LLC, the parent company of beauty retailer Morphe LLC, filed for bankruptcy in Delaware on Thursday as it reached a deal with lenders including Jefferies and Cerberus Capital Management, Bloomberg News reported. As part of the agreement, secured creditors will take over Forma’s wholesale operations, online platforms and international Morphe retail stores while providing $33 million of new money, subject to court approval, according to a company statement. The court filing caps a tumultuous two-and-a-half years for the San Francisco-based company that failed to see revenues grow in spite of marketing deals with youtubers and influencers. The retailer recently announced that it would shutter all of Morphe’s retail locations in the U.S. It had to cut ties with two of its big three influencers and wrestle with a litany of litigation for missed rent and vendor payments. Forma has between $500 million and $1 billion in liabilities, according to court documents.
A Menomonee Falls window installer with hundreds of unhappy customers is entering chapter 11 bankruptcy, Fox6Now.com reported. Window Select confirmed that it plans to enter bankruptcy proceedings in late January. More than 400 consumers have filed complaints with Wisconsin Consumer Protection about Window Select. Many said they paid for projects that had not started — or were not finished. Window Select moved out of its headquarters in 2022. The company faces dozens of cases in small claims court.
Bed Bath & Beyond Inc. reported a wider net loss than expected yesterday, underscoring the likelihood of a bankruptcy filing within the next couple of months by one of the largest US home-goods retailers, Bloomberg News reported. The beleaguered retailer said its net loss widened to $393 million in the three months ended Nov. 26. Just last week, the company had said it expected to report a net loss of $386 million. That compares with a loss of $366 million in the second quarter. The company reiterated on Tuesday that it was considering “all strategic alternatives” to get back on financial track. “Multiple paths are being explored and we are determining our next steps thoroughly,” Bed Bath & Beyond Chief Executive Officer Sue Gove said in a statement. Last week, the retailer said those options included the possibility of bankruptcy, a warning that came after it withdrew a bond-swap offering. It had launched the plan in October to lessen its debt burden. The company said on Tuesday that it had about $200 million of cash on hand. Read more.
In related news, Bed Bath & Beyond will lay off more employees in an attempt to reduce costs, the company said yesterday, a week after announcing it was exploring options including bankruptcy, Reuters reported. Last year, company executives had said the home goods retailer was cutting about 20% of its corporate and supply chain workforce. "As our strategic direction changes and we streamline our operations, it is necessary to right-size our organization to ensure we are equipped for the future," the company said in a statement on Tuesday, without revealing the magnitude of the new layoffs. Read more.
Bed Bath & Beyond Inc. has brought on turnaround consultant AlixPartners as its new restructuring adviser as the troubled home-goods retailer prepares for a likely bankruptcy, WSJ Pro Bankruptcy reported. The company has also been working with law firm Kirkland & Ellis LLP and investment banker Lazard Ltd. on restructuring efforts, and last week said it is considering all options including a bankruptcy filing to battle its declining cash and dropping revenue. AlixPartners replaced Berkeley Research Group LLC, a consulting firm Bed Bath & Beyond had been working with since the middle of last year. A representative for Bed Bath declined to comment on AlixPartners’s hire and added that it has a team “internally and externally with proven experience in helping companies successfully navigate complex situations and become stronger.” BRG was brought on in June to help Bed Bath improve its cash and inventory levels and balance sheet. The retailer secured $375 million in loans in August to shore up its cash position and help pay down some existing debt. The company planned to reduce its spending by cutting $150 million in capital expenditures for fiscal 2022. The loans provided by Sixth Street Partners helped pad its liquidity and assuage vendors’ concerns about the retailer’s ability to pay them. The company went on a roadshow in the fall to convince vendors not to tighten payment schedules on goods shipments.
Party City Holdco Inc. has sought funding for a potential chapter 11 bankruptcy, Bloomberg News reported. The company, which is preparing to enter bankruptcy protection within weeks, is sharing information with potential providers of debtor-in-possession financing, said the people, who asked not to be identified because the matter is private. Rockaway, N.J.-based Party City has been negotiating with a creditor group that includes Capital Group Cos Inc. and Silver Point Capital ahead of the potential filing, Bloomberg reported. Known for selling balloons and other festive supplies, Party City has been squeezed by a higher costs of goods and shipping as well as a helium shortage. Sales during the critical Halloween period disappointed investors. The retailer has been getting advice from Moelis & Co. and law firm Paul Weiss Rifkind Wharton & Garrison.
