After revealing plans to close hundreds of stores nationwide – including one in New Jersey – discount home goods chain Big Lots is seeking bankruptcy protection.

In a Sept. 9 announcement, the Columbus, Ohio-based company said it initiated voluntary Chapter 11 proceedings ahead of an expected acquisition by private equity firm Nexus Capital Management.

Under the terms of the proposed sale, Nexus would acquire “substantially all” of Big Lots’ stores and business operations for about $760 million. That sum includes $2.5 million in cash as well as remaining debts and liabilities.

Unless higher or better offers materialize during the court-supervised auction process, the transaction expects to close during the fourth quarter of 2024.

The Chapter 11 filing comes about a month after Big Lots said it would close roughly 300 of its 1,400 stores. Within New Jersey, only one location in the chain’s 27-store footprint is impacted: Woodbridge.

Stores not previously announced to close will remain open and serving customers, as will Big Lots’ website, the company said. In connection with the court-supervised process, Big Lots said it secured $707.5 million in fresh financing, including $35 million from current lenders, to keep operating and pay employees and vendors.

However, Big Lots added it will continue to “assess its operational footprint” and could close additional stores. The company will also work on its distribution center model.

Big Lots President and CEO Bruce Thorn commented, “Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers. To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner.”

Optimized outlook

Headquartered in Los Angeles, Nexus’ investment portfolio includes FTD, Dollar Shave Club and Toms.

In a statement, Evan Glucoft, the firm’s managing director, said, “We are excited to have the opportunity to partner with Big Lots and help return this iconic brand to its status as America’s leading extreme value retailer. The Big Lots business has incredible potential and we are confident that its greatest days are ahead.”

In June, Big Lots expressed “substantial doubt” about its ability to continue as a going concern, citing a pullback in consumer spending due to inflation.

As part of a turnaround effort, Big Lots says it is taking steps to reduce costs, improve sales, and enhance its financial flexibility and liquidity.

While the company says its performance has improved, the board of directors conducted a strategic review of alternatives and determined that a sale to Nexus is the best path forward to maximize value and ensure continued operations.

Thorn said, “We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts.”

He added, “The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value.”