Below is our initial take on recent bankruptcy-related developments:
Bed Bath & Beyond has expanded its list of additional stores they expect to close, from 87 to 149. In total the company is reducing its store count from 760 to about 360. The updated list includes closures in 13 new states that weren’t included in last week’s store-closing list.
S&K Take: We are burying the lede a little with this one—the biggest news out of BBBY this week was the rescue equity financing that staved off a bankruptcy filing for the time being. The company was able to sell $225 million in preferred shares, which will allow it to pay down its revolver. Investors also have the option to exercise warrants to purchase another $800 million in pref, which would full pay down the revolver and add significant liquidity to the balance sheet. There are also warrants for common that could be purchased, so it remains to be seen where we wind up. In any case, it is pretty incredible news after the doom and gloom of the last few weeks, and I personally have to eat some crow (I think I called the bankruptcy a fait accompli at some point in these pages). According to reports, financial institutions were wary of negative publicity that might arise from terminating a very large number of employees, motivating the financing. The news in this article focuses on the rationalization of BBBY’s footprint, which is a piece of the restructuring puzzle that needs to be put together now that liquidity has been addressed, at least for the time being.
Coin Cloud’s digital currency ATM operator, Cash Cloud, filed for Chapter 11 Bankruptcy this week.
S&K Take: Next up in the crypto carnage is Coin Cloud. Not much to see here, although we would note one interesting aspect of the Coin Cloud cases as they relate to Genesis. Genesis, earlier this week, filed a motion for court authority to be primed in the Coin Cloud case. Genesis has a relatively small secured position, and is getting adequate protection for being primed. Not a motion that you see a debtor file every day, so that one caught our attention.
The Board of Directors of Robinhood has approved a plan to purchase up to 55 million shares bought by former FTX CEO Sam Bankman-Fried. Robinhood is coordinating with the Department of Justice on the move.
S&K Take: Looks like the infamous Robinhood shares that have been the subject of much acrimony in the FTX and other insolvency proceedings will be liquidated. Probably for the best, no need to leave value to chance, no matter who the beneficiary might be. Now multiple estates and entities can vie for control of a pot of cash instead of Robinhood equity.
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Nielsen & Bainbridge LLC, a home décor wholesale supplier based in Texas, has filed for Chapter 11 Bankruptcy this week.
S&K Take: An interesting new filing in the Southern District of Texas this week. It was among a number of new filings in the $100 million to $500 million liability range, which is good news for restructuring practitioners. This one in particular is another hit in the consumer goods space. We would expect to see more activity in the sector given the rising cost of capital, inflation, supply chain issues and decreased consumer spending.