Tupperware Brands Corp.’s stock slid 45% Monday to the lowest level in three years, after the maker of food-storage goods issued a going-concern warning late Friday, saying it has hired financial advisers to help navigate its near-term challenges.
The news is just the latest blow to the company TUP, -46.90%,
whose products were once a fixture in American homes, made popular in the 1950s by stay-at-home moms who would gather at special parties to introduce the product line to friends and family.
The company’s website opens on an image from the Amazon Prime show “The Marvelous Mrs. Maisel,” with the title character hosting her own party and showing friends a pastel-colored vintage line.
That direct-selling model is no longer fashionable in the U.S., although it has traction in markets like Indonesia, where women have limited earnings opportunities but often gather to eat and drink.
The company has struggled for years to retain its selling force, which has been shrinking thanks to the proliferation of other gig-economy opportunities around the world.
In March, the company told analysts on its fourth-quarter earnings call that the sales force fell 18% last year.
That wasn’t even the worst news from that call, because Tupperware had warned in its earning release that it had identified weakness in internal control over financial reporting and that it expected to restate prior financials.
On Friday, it said that once it finalizes its 10-K annual report, which is now late, that the numbers announced in March would differ significantly from the restated numbers. It expects to file the 10-K with the Securities and Exchange Commission in the next 30 days.
Then there’s the issue of the company’s debt burden, which has led to repeated efforts to squeeze concessions from bank lenders so it can remain compliant with financial covenants.
Due “to the challenging internal and external business economics, coupled with the increased levels and cost of borrowings under its credit facility, the company currently forecasts that, if it is unable to obtain adequate capital resources or amendments to its credit agreement, it may not have adequate liquidity in the near term,” the company said on Friday.
The company is looking for additional financing and is discussing its options with potential investors or financing partners. Tupperware is also reviewing its real-estate portfolio with an eye toward potential sales or lease-back transactions, it said.
On its third-quarter earnings call in November, Fernandez acknowledged that some of the company’s problems are of its own making. “The global macro environment continues to be challenging, and we are not executing internally at a level or consistency that we believe we should be,” he told analysts on the call, according to a FactSet transcript.
One key challenge is connecting with younger consumers, who are unlikely to attend Tupperware parties. The company started to sell its goods at 1,900 Target TGT, +2.12%
stores in the U.S. at the start of the third quarter as part of a strategy of reducing its reliance on direct selling.
But those sales accounted for just 1% of total sales in the fourth quarter, suggesting the strategy has not gained traction.
One challenge facing Tupperware is price. Amazon AMZN, -0.27%
and other retailers such as dollar stores offer far cheaper food-storage containers. In addition, Americans are increasingly shopping online.
Tupperware’s stock has fallen 98% in the last 12 months, while the S&P 500 SPX, -0.12%
has fallen 9%.
Shares in Cineworld plunged more than 30% Monday, hitting their lowest level since late August, after the owner of Regal Cinemas said it planned to terminate efforts to sell its US, UK and Irish businesses.
The world’s second-largest movie theater chain also announced a debt restructuring plan with lenders to help it exit bankruptcy. The deal does not provide for any recovery of funds for shareholders, the company said in a statement.
“This agreement with our lenders represents a ‘vote of confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment,” said CEO Mooky Greidinger.
Cineworld — which, like many cinema operators, was hit hard by the pandemic — filed for Chapter 11 bankruptcy protection in September. Over the past year, the company’s shares have lost more than 93% of their value.
Under the proposed debt restructuring, lenders will reduce Cineworld’s debt pile by $4.5 billion and receive equity in the reorganized group; provide $1.46 billion in new debt; and backstop a $800 million share issue.
The company said it had received offers for its businesses in other parts of the world and was considering them. In addition to the United States, the United Kingdom and Ireland, Cineworld operates cinemas in Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel.
It will abandon plans to sell its US, UK and Ireland arms unless it receives an “all-cash bid” significantly higher than the current value of the businesses.
The British company continues to operate its theaters around the world. After two rounds of closures in the United States, around 500 Cineworld theaters remain across the country.
The company said in February that it expected shareholders to be wiped out entirely by the bankruptcy process, even in the event of a sale of some of its businesses.
The pandemic forced movie theaters around the globe to close, dealing a devastating blow to Cineworld and others in the industry, and it is still affecting visitor numbers. Cineworld lost $2.7 billion in 2020 and another $566 million in 2021. It reported another loss, of $294 million, in the six months ending in June 2022.
Cinema operators are coming up with creative ways to claw back revenue. Cineworld’s larger rival AMC Theaters announced recently that it would price tickets based on seat location, charging extra for more desirable seats in the middle of a theater.
First Republic and PacWest Bankcorp saw their share prices plummet this week as the fallout from the Silicon Valley Bank collapse continues. Meanwhile, the former parent company of Silicon Valley Bank filed for bankruptcy Friday. Nancy Cordes has more.
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The parent company of Silicon Valley Bank filed for Chapter 11 bankruptcy protection Friday, a week after the tech-focused bank failed in a sudden collapse that set off fears of wider problems in the global banking system.
The filing from SVB Financial Group was widely expected, with much of the company now under the control of banking regulators. The bank was seized last week by the federal government.
In other developments, the bank, its CEO and its chief financial officer were targeted in a class action lawsuit that claims the company did not disclose the risks that future interest rate increases would have on its business.
SVB Financial Group is no longer affiliated with Silicon Valley Bank after the bank was taken over by the Federal Deposit Insurance Corporation. The bank’s successor, Silicon Valley Bridge Bank, was not included in the Chapter 11 filing.
The bankruptcy filing by SVB Financial Group creates a legal battle over the bank’s remaining assets between the creditors of the holding company and regulators who are looking to make depositors whole.
SVB Financial Group believes it has approximately $2.2 billion of liquidity. It also said it has other valuable securities and assets that are being considered for sale.
“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets,” William Kosturos, chief restructuring officer for SVB Financial Group, said in a statement.
Those assets include SVB Capital, the company’s venture capital and private credit fund, and SVB Securities, a regulated broker-dealer. Both continue to operate and have sources of funding, the company said.
The Wall Street Journal reported that a group of distressed debt investors — mostly hedge funds — bought the bonds of Silicon Valley Bank’s holding company in a bet that that there will be some proceeds for bondholders after the bankruptcy process is completed.
The shuttering of Silicon Valley Bank on March 10 and of New York’s Signature Bank two days later revived memories of the financial crisis that plunged the United States into the Great Recession almost 15 years ago.
Determined to restore public confidence in the banking system, the federal government moved last weekend to protect all the banks’ deposits, even those that exceeded the FDIC’s $250,000 limit per individual account.
During the 2008 crisis, the parent companies of failed banks Washington Mutual and IndyMac also filed for bankruptcy protection in the days after their operations failed.
SVB Financial, the former parent of Silicon Valley Bank, said it filed for bankruptcy, a week after the tech-reliant bank was shut down by regulators following a run on the financial institution that drove it into insolvency.
In a Friday statement, SVB Financial said it is no longer affiliated with Silicon Valley Bank or its private banking and wealth management unit, SVB Private, following its takeover by the Federal Deposit Insurance Corporation. Silicon Valley Bank isn’t included in the Chapter 11 filing, the company said.
The bankruptcy filing also doesn’t include SVB Securities and SVB Capital’s funds as well as its general partner entities, the statement noted. The parent company said it is continuing to search for “strategic alternatives” for those divisions, which continue to operate and undertake business for customers.
“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities,” said William Kosturos, chief restructuring officer for SVB Financial Group, in the statement.
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Diamond Sports Group, which operates regional sports networks that televise nearly half of all MLB, NBA and NHL games, filed for Chapter 11 bankruptcy protection Tuesday.
Diamond is owned by Sinclair Broadcasting Group Inc. SBGI, and operates its networks under the Bally Sports name.
In a statement Tuesday, Diamond said it was finalizing a…
SALEM, Ore. — Oregon was taking a major step Friday in its pioneering of legalized psilocybin therapy with the graduation of the first students trained in accompanying patients tripping on psychedelic mushrooms, although a company’s bankruptcy has left another group on the same path adrift.
The graduation ceremony for 35 students was being held Friday evening by InnerTrek, a Portland firm, at a woodsy retreat center. About 70 more will graduate on Saturday and Sunday in ceremonies in which they will pledge to do no harm.
“Facilitator training is at the heart of the nation’s first statewide psilocybin therapy and wellness program and is core to the success of the Oregon model we’re pioneering here,” said Tom Eckert, program director at InnerTrek and architect of the 2020 ballot measure that legalized Oregon’s program.
The students must pass a final exam to receive InnerTrek certificates. They then take a test administered by the Oregon Health Authority to receive their facilitator licenses.
“The graduation of the first cohort of students from approved psilocybin facilitator training programs is a significant milestone for Oregon,” said Angie Allbee, manager of the state health authority’s psilocybin services section. “We congratulate Oregon’s future facilitators and the training programs they are graduating from on this incredible and historic moment in psilocybin history.”
The health authority reported Friday that so far it has received 191 license and worker permit applications, including licenses for manufacturers of psilocybin and service centers where the psychedelic substance would be consumed and experienced.
Allbee said she expects students will soon submit applications for licenses, “which will move us closer to service center doors opening in 2023.”
Some classes in InnerTrek’s six-month, $7,900 course were held online, but others were in-person, held in a building near Portland resembling a mountain lodge.
The students were told that a dosing session at a licensed center should include a couch or mats for clients to sit or lie on, an eye mask, comfort items like a blanket and stuffed animals, a sketch pad, pencils and a bucket for vomiting. A session typically lasts at least six hours, often with music. Trainers emphasized that the facilitators’ clients should be given the freedom to explore whatever emotions emerge during their inner journeys.
“We’re not guiding,” trainer Gina Gratza told the students in a December training session. “Let your participants’ experiences unfold. Use words sparingly. Let participants come to their own insights and conclusions.”
Researchers believe psilocybin changes the way the brain organizes itself, permitting users to adopt new attitudes more easily and help overcome depression, PTSD, alcoholism and other issues.
Eckert said the graduating students will be prepared to help clients see the benefits of psilocybin.
“I feel like it’s a big moment for our culture and country as we collectively begin to reexamine and reevaluate the nature of mental health and wellness, while bringing real healing to those in need,” he said.
Another facilitator training effort in southern Oregon has left students upset and a lawyer in the Netherlands trying to figure out what happened.
Synthesis Institute — a company based in the Netherlands that has over 200 students in Oregon, according to an article in Psychedelic Alpha — was declared bankrupt Tuesday, Dutch court documents showed. The company’s website, which as of Friday had not been taken down, shows tuition being $12,997. The students are trying to get refunds.
“Synthesis really just has ripped the rug out from under us, for a lot of people,” one of the students, Cori Sue Morris, told Psychedelic Alpha.
Roos Suurmond, a lawyer in Amsterdam specializing in insolvency law, confirmed she has been appointed as a trustee to deal with the bankruptcy. She said in an interview she could not yet answer questions on the bankruptcy as she had so recently been appointed and still must investigate.
By February, the company’s liabilities totaled around $850,000, and it could not afford to pay its employees in the U.S. and the Netherlands, Psychedelic Alpha reported.
A real estate purchase in southern Oregon did not help matters.
An Oregon limited liability company, Oregon Retreat Centers LLC, was formed by Synthesis co-founder Myles Katz, Psychedelic Alpha reported. It purchased a 124-acre rustic retreat near Ashland, Oregon, in Jackson County for $3.6 million and planned to turn the site into a psilocybin service center, but a zoning problem developed.
While Oregon voters approved the measure on psilocybin in 2020, it did not make the drug legal until Jan. 1, 2023. The psilocybin sessions are expected to be available to the public in mid- or late-2023.
In November, Colorado voters also passed a ballot measure allowing regulated use of “magic mushrooms” starting in 2024.
A shortage of albuterol, a widely used drug for the treatment of asthma and respiratory syncytial virus (RSV), could worsen after a major manufacturer, Akorn, shuttered three of its facilities last month.
Akorn, a generic drug maker which filed for Chapter 7 bankruptcy last month, shut down its facilities in New Jersey, New York and Illinois. Its Illinois factory was licensed to produce liquid albuterol used in nebulizers, a type of medical device that converts the respiratory medication into a mist that can be inhaled.
The closures leave only one domestic supplier of liquid albuterol fully operational in the U.S. However, another pharmaceutical supplier is gearing up to build a second supply, the Washington Post reported.
The FDA said in an email to CBS MoneyWatch that it will assess how the Akorn closures may affect drug supply chains nationwide.
Albuterol is among the top ten most commonly prescribed medications in the U.S., according to a recent study.
The drug has been on the FDA shortage list since last fall, where it joined dozens of other generic drugs that are in short supply nationwide. Generic drugs, which are priced much lower than their brand-name counterparts, are less profitable for drugmakers. As a result, they often have fewer manufacturers, which leave them more susceptible to shortages if one producer fails or closes factories.
Several months before Akorn closed its facilities, the company had stopped shipping out its 20-milliliter bottles of liquid albuterol, according to Premier, a group purchasing organization (GPO) for major U.S. hospitals.
Akorn’s closures could prolong those shortages into 2023, Premier added.
As their Albuterol supplies shrink, hospitals have turned to compounding, a process in which drugs are combined by a pharmacist to create a unique formulation that meets a patient’s unique needs. This has allowed hospitals to stretch their supplies of the drug, the Washington Post noted. Due to those efforts, patients have remained insulated from the direct effects of the shortage.
Opinions expressed by Entrepreneur contributors are their own.
Bankruptcy can provide financial relief, but the downside is that it can negatively impact credit. While bankruptcy will remain on a credit report for as long as 10 years, the impact will lessen with time. Whether you filed Chapter 7 (which means you have the ability to pay back your debts) or Chapter 13 (you’re required to pay your creditors all of your disposable income), it is possible to start rebuilding credit with some simple measures.
Rebuilding credit after bankruptcy as an entrepreneur can be challenging, but it’s not impossible. The first step is understanding that rebuilding credit takes time and consistent effort.
How bankruptcy affects credit
Payment history is one of the most important factors when determining credit scores. When someone files for bankruptcy, the individual won’t be repaying covered debts in full as per the original credit agreement. This means that when filing for bankruptcy, it can have a severe negative impact on someone’s credit score.
A bankruptcy filing will appear on an individual’s credit report for up to 10 years, making it difficult to obtain credit or loans in the future. An entrepreneur may also have difficulty obtaining credit from suppliers or vendors, as they may be hesitant to extend credit to a business that has filed for bankruptcy.
Regardless of the bankruptcy type, lenders will see it on a credit report within the public records section, and it is likely to be a decision-making factor. After completing the legal process, it will show the bankruptcy and included debts that have been discharged.
However, it’s important to note that filing for bankruptcy can also provide a fresh start for an entrepreneur, allowing them to discharge debt and start anew.
When applying for credit, lenders may not approve certain types of credit — and even if approved, an individual may find that they’re offered higher interest rates or other unfavorable terms.
It can be difficult for an entrepreneur to get a credit card after filing for bankruptcy. Many lenders view individuals who have filed for bankruptcy as a higher risk. However, it is possible to get a credit card after bankruptcy, but it may take time and effort.
The best approach is to apply for a card that is specifically designed to help rebuild credit. An ideal card option is a secured credit card — approval is possible even with a fresh bankruptcy. Secured cards typically have a credit limit equal to the amount of security deposit that is provided.
However, some unsecured card issuers won’t pull a credit score or may extend a line of credit even if there are blemishes on someone’s credit history. Just be aware that these types of cards typically have extremely high rates and an abundance of fees. A secured card is likely the better option with lower costs.
The best ways to build credit after bankruptcy
As soon as a bankruptcy has been finalized, the individual can start working on building credit. Some of the best ways include the following:
Maintain payments on non-bankruptcy accounts
After filing, determine if any accounts have not been closed. While bankruptcy cancels most debt, there may be some remaining. Paying down these balances can lower the debt-to-income ratio — making timely payments remains crucial. Consistent payments will also help with staying on top of bills.
Keep credit balances as low as possible
Credit balances not only impact the credit utilization ratio but depending on how the need to file for bankruptcy was developed, people should look to avoid falling into the same habits. Reduce credit card usage and pay down balances — it will benefit your financial health.
Build emergency savings
Save some money each payday to build emergency savings. This will provide a fund for unexpected expenses, which will help to avoid incurring future debt that could impede rebuilding credit.
Get a secured card
As we touched on above, a secured credit card could help with rebuilding credit. While a security deposit is necessary, each time that a repayment is made on the card’s account, it will be reported to the credit bureaus. This will demonstrate responsible credit behavior.
Some secured card issuers allow cardholders to move on to an unsecured card after making consistent and on-time payments. This is a great benefit as there will be no need to apply for a new card as credit starts to improve.
Consider credit builder loans
A credit builder loan could be another way to help build credit. An individual will need to have a certain amount of money held in a secured savings account, but the individual can make monthly payments until the loan amount is repaid. Depending on the lender, it is also possible to have a secured loan that allows borrowing against savings.
As with a traditional loan, the payment activity for a credit builder loan will be reported to the major credit bureau, which will help to improve credit scores over time.
This will depend on an individual’s specific circumstances, but if someone is making consistent payments, and has a low credit utilization ratio and low debt-to-income ratio, they should start to see positive changes to their credit score after approximately six months.
However, be prepared to take a long-term approach. Remember that bankruptcy will be on a credit report for seven to 10 years. While the effects will diminish over time, responsible behavior will lead to improvements. Stay patient.
There is no need to wait for bankruptcy to disappear from a credit report to apply for a mortgage. However, if applying for a conventional mortgage, an individual will need to wait at least four years after bankruptcy has been discharged. If there are extraneous circumstances, it may be possible after two years.
NEW YORK (AP) — For federal prosecutors, Sam Bankman-Fried could be the gift that keeps on giving.
After the November collapse of FTX, the cryptocurrency exchange he founded in 2019, Bankman-Fried unexpectedly gave a series of interviews intended to present his version of events. He was indicted in December and charged with perpetrating one of the biggest frauds in U.S. history — and he’s still talking, either in person or on the internet.
The atypical chattiness for a criminal defendant is likely causing Bankman-Fried’s attorneys to scratch their heads, or worse. Prosecutors can use any statements, tweets or other communications against him at his trial, which is scheduled for October.
“Prosecutors love when defendants shoot their mouths off,” said Daniel R. Alonso, a former federal prosecutor who is now a white-collar criminal defense attorney. If Bankman-Fried’s public comments before trial can be proven false during the trial, it may undermine his credibility with a jury, he said.
Bankman-Fried returned to Manhattan federal court on Thursday for a hearing into whether his bail package will be altered to prevent witness tampering. Prosecutors say he sent an encrypted message over the Signal texting app on Jan. 15 to the general counsel of FTX US, a likely witness for the government.
Lawyers were scheduled to submit more information to Judge Lewis A. Kaplan by Monday before he makes a decision about the bail package. Bankman-Fried has been confined with electronic monitoring to his parents’ home in Palo Alto, California, since December.
Before its collapse, FTX was the world’s second-largest crypto exchange and Bankman-Fried, 30, was its CEO and a billionaire several times over, at least on paper. Celebrities and politicians alike vouched for FTX and its founder, and Bankman-Fried was considered a leading figure in the crypto world.
However, the broad collapse of cryptocurrencies last year caused severe financial stress for numerous companies in the crypto universe, from lenders to exchanges to firms focused on investing in digital assets. FTX sought bankruptcy protection in November after customers pulled out their money in the crypto equivalent of a bank run.
Federal prosecutors have said Bankman-Fried devised “a scheme and artifice to defraud” FTX’s customers and investors right from FTX’s inception. They say he illegally diverted their money to cover expenses, debts and risky trades at Alameda Research, the crypto hedge fund he started in 2017, and to make lavish real estate purchases and large political donations.
In interviews and Twitter posts, Bankman-Fried has said he never intended to defraud anyone. He’s maintained that running FTX took up all his time and that he was unaware of the financial problems at the hedge fund until it was too late.
Those assertions are likely to be refuted by one of the government’s key witnesses. Caroline Ellison, the former CEO of Alameda, has agreed to plead guilty for her role in FTX’s collapse and to testify against Bankman-Fried. In a plea hearing in December, Ellison said she knew FTX had used billions in customer funds to make loans to Alameda and agreed with Bankman-Fried and others to take steps to conceal the nature of the loans.
Gary Wang, who co-founded FTX with Bankman-Fried, also struck a deal for cooperation. At his own plea hearing, Wang said that he made changes to computer code to enable FTX customer funds to be transferred to Alameda.
Another claim made often by Bankman-Fried is that he’s trying to help recover funds for FTX customers, but that FTX’s new management has cut him off and has taken steps, including filing for bankruptcy protection, that could inhibit customers from getting their money back.
For instance, Bankman-Fried says that when FTX collapsed, outside parties had made funding offers totaling billions of dollars, and if given a few weeks the company could have raised enough money “to make customers substantially whole.” Instead, it was “strong-armed” into filing for bankruptcy protection by its main law firm, Sullivan & Cromwell, a claim the firm denies.
Bankman-Fried has also frequently taken issue with decisions made by FTX’s new CEO, John Ray. Bankman-Fried has often claimed that FTX’s U.S. operation, which was considerably smaller than the international operations, was solvent at the time of the bankruptcy filing, a contention that Ray disputes.
“I’m still waiting for him to finally admit that FTX US is solvent and give customers their money back,” Bankman-Fried tweeted on Jan. 19.
Bankman-Fried was scheduled to testify under oath in front of Congress in December with Ray, but that appearance was cancelled because of his arrest in the Bahamas, where FTX is based.
“The real risk Bankman-Fried runs in making public comments ‘explaining’ what happened is they could be seen as continuing efforts to mislead investors by regulators and prosecutors,” said Jeff Linehan, a former prosecutor in the financial crimes division of the New York State Attorney General’s Office. Linehan is now a criminal defense attorney.
Bankman-Fried’s comments at the time of FTX’s collapse could also come back to haunt him. On Nov. 7, as customers furiously demanded their money back, he tweeted “FTX is fine. Assets are fine.” He deleted the tweet the next day. On Nov. 11, FTX filed Chapter 11.
Through a spokesman, Bankman-Fried decline to comment for this article.
Some defendants will go through their entire legal ordeal without saying anything that isn’t first cleared by their attorneys. Even putting defendants on the witness stand at trial has long been seen by defense attorneys as a last-resort option because it opens them up to interrogation by prosecutors and often does more harm than good.
“As the prosecution prepares their case, it’s really important to figure out what the defense’s strategy could be, and a defense wants to keep that strategy under wraps as much as possible,” said Alonso, the former federal prosecutor.
Bankman-Fried faces the possibility of decades in prison if convicted on all counts. Even if he were to agree to a plea bargain, a judge would have full discretion on what sentence to impose. If the judge does not believe Bankman-Fried is truly sorry for his actions, based partly on his public statements, he could ignore the prosecution’s recommendations and imposing a stricter sentence, legal experts say.
Before FTX collapsed, Bankman-Fried had built up a gigantic public persona. He spoke often to reporters, testified in front of Congress, and appeared at conferences to advocate for cryptocurrencies and his firm. He gave millions of dollars to political candidates and advocated for charitable causes such as food issues in the Bahamas. It could be difficult to give up that sort of public influence.
“Some people simply can’t help themselves,” Alonso said.
_____
AP Reporter Larry Neumeister contributed to this report from New York.
Bed Bath & Beyond Inc.’s Canadian division will shut down its stores under court protection after the company received an unusual lifeline earlier this week to save its U.S. operations from bankruptcy.
The troubled retailer filed its Canadian division for protection under the Companies’ Creditors Arrangement Act, Canada’s rough equivalent of chapter 11 bankruptcy. Bed Bath & Beyond has “reluctantly concluded” that even with the lifeline of its recent equity raise, there isn’t enough capital available both to restructure its U.S. business and bring the Canadian business to profitability, the company said in filings with an Ontario court.
Bed Bath & Beyond, America’s quintessential home furnishings’ chain, is fighting to stay in business.
The company has avoided a bankruptcy filing for now by completing a complex stock offering that will give it an immediate injection of $225 million in funds and a pledge for $800 million in the future to pay down its current debt load.
Bed Bath & Beyond is also shrinking to save money. The company said it plans to close around 400 of its roughly 760 Bed Bath & Beyond stores. It will keep open its most profitable stores in key markets.
The moves are a lifeline for Bed Bath & Beyond. They will give the company time to pursue a turnaround without a bankruptcy filing, which can be costly, out of its control and wind up in a liquidation.
“They are essentially doing a reorganization outside of bankruptcy court,” said Daniel Gielchinsky, an attorney at DGIM Law specializing in bankruptcy. “Slow the cash burn is the name of the game for the next 6 to 12 months and allow the company to pivot into a profitable position.”
It will be a complicated turnaround and the company’s future remains uncertain. If Bed Bath & Beyond comes up short in the current version of its turnaround plan, the likelihood of a liquidation increases.
Here’s how Bed Bath & Beyond, once a retailer pioneer, veered to the edge of bankruptcy and where it turns next.
Bed Bath & Beyond had been a crown jewel of the era of so-called “category killers”: chains that dominated a category of retail, such as Toys “R” Us, Circuit City and Sports Authority. Those companies, too, ultimately filed for bankruptcy.
Bed Bath & Beyond became known for pots and pans, towels and bedding stacked from the floor to the ceilings at its cavernous stores — and for its ubiquitous 20%-off coupons. The blue-and-white coupons became something of a pop culture symbol, and millions of Americans wound up stashing them away in their cars, closets and basements.
The retailer attracted a broad range of customers by selling name brands at cut-rate prices. Brands coveted a spot on Bed Bath & Beyond’s shelves, knowing it would lead to big sales. Plus, the open-store layout encouraged impulse buying: Shoppers would come in to buy new dishes and walk out with pillows, towels and other items.
Stores were a fixture for shoppers around the winter holidays and during the back-to-school and college seasons, and Bed Bath & Beyond also had a strong baby and wedding registry business.
Founded in 1971 by two veterans of discount retail in Springfield, New Jersey, the chain of small linen and bath stores — then called Bed ‘n Bath — first grew around the northeast and in California selling designer bedding, a new trend at the time. Unlike department stores, it didn’t rely on sales events to draw customers.
“We had witnessed the department store shakeout and knew that specialty stores were going to be the next wave of retailing,” co-founder Leonard Feinstein reportedly said in 1993. “It was the beginning of the designer approach to linens and housewares and we saw a real window of opportunity.”
In 1987, the company changed its name to Bed Bath & Beyond to reflect its expanded merchandise and bigger “superstores.” The company went public in 1992 with 38 stores and around $200 million in sales.
By 2000, those figures leaped to 241 stores and $1.1 billion in sales. The 1,000th Bed Bath & Beyond store opened in 2009, when the chain had reached $7.8 billion in sales.
The company was something of an iconoclast. It spent little on advertising, relying instead on print coupons distributed in weekly newspapers to attract customers.
“Why not just tell the customer that we’ll give you a discount on the item you want — and not the one that we want to put on sale? We’ll mail a coupon, and it will be a lot cheaper,” Bed Bath & Beyond co-founder Warren Eisenberg, now 92, said in a 2020 New York Times interview.
The chain was known for giving autonomy to store managers to decide which products to stock, allowing them to customize their individual stores, and for shipping products directly to stores instead of a central warehouse.
But as brick-and-mortar began to give way to e-commerce, Bed Bath & Beyond was slow to make the transition — a misstep compounded by the fact that home decor is one of the most commonly bought categories online.
“We missed the boat on the internet,” Eisenberg said in a recent Wall Street Journal interview.
Online shopping weakened the allure of Bed Bath & Beyond’s fan-favorite coupons, too, because consumers could find plenty of cheaper alternatives on Amazon or browse a wider selection on sites like Wayfair
(W).
It wasn’t just Amazon and online shopping that sank Bed Bath & Beyond, however.
Walmart
(WMT), Target
(TGT) and Costco
(COST) have grown over the past decade, and they have been able to draw Bed Bath & Beyond customers with lower prices and a wider array of merchandise. Discount chains such as HomeGoods and TJ Maxx and have also undercut Bed Bath & Beyond’s prices.
Without the differentiators of the lowest prices or widest selection, Bed Bath & Beyond’s sales stagnated from 2012 to 2019.
The company was hit hard during the pandemic, closing stores temporarily during 2020 while rivals remained open. Sales sunk 17% in 2020 and 15% in 2021.
What’s more, Bed Bath & Beyond has rotated through several different executives and turnaround strategies in recent years.
Former Target executive Mark Tritton took the helm in 2019 with backing from investors and a bold new strategy. He scaled back coupons and inventory from national brands in favor of Bed Bath & Beyond’s own private-label brands.
But this change alienated customers who were loyal to big brands. The company also fell behind on payments to vendors and stores did not have enough merchandise to stock shelves. Tritton left as CEO in 2022.
As of late November the company had 949 stores, including 762 Bed Bath & Beyond stores and 137 buybuyBaby stores.
It said Tuesday that it will ultimately have about half that number – 360 Bed Bath & Beyond stores and 120 buybuyBaby locations.
Bed Bath & Beyond will close stores that drain the most cash out of its business.
But the closures will mean Bed Bath & Beyond will give up on stores that brought in $1.2 billion in annual sales, Michael Lasser, an analyst at UBS, said in a note to clients Tuesday. Bed Bath & Beyond will recapture a portion of those sales from its other stores and online, Lasser said, but the majority will go to other retailers.
But, to survive, the company needs to grow sales at its remaining stores. Otherwise, too much of Bed Bath & Beyond’s revenue will go toward repaying debt that it won’t be able to turn a profit.
Reversing sales declines won’t be easy given challenges with waning customer demand, online traffic and rising competition in Bed Bath & Beyond product categories, Lasser said. Bed Bath & Beyond will have to overcome its significant hurdles to become a healthy, profitable company.
Bankruptcy lawyer Daniel Gielchinsky, however, said it was an encouraging sign that Bed Bath & Beyond was able to raise enough cash through a public offering to stay afloat. The offering was reportedly backed by investment firm Hudson Bay Capital. (Hudson Bay did not respond to a CNN Business request for comment.)
Still, liquidators will be watching closely, he said, eager to pounce.
“They are assuredly waiting on the sidelines to dismantle the company at the ready.”
Struggling retailer Bed Bath & Beyond said Monday it plans to sell shares of the company in hopes of generating enough cash to avoid filing for bankruptcy.
Bed Bath & Beyond is aiming to raise $1 billion from the offering and use the proceeds to pay down some of its debt and make interest payments it missed on other loans. Mired in a sales slump, the home goods chain is set to close 87 more stores in coming weeks after shutting 150 locations last year.
Bed Bath & Beyond didn’t immediately respond to a request for comment Monday. In a statement, the company said it “cannot give any assurances that it will receive any or all of the proceeds of the offering.”
Wall Street onlookers decried the move as a fruitless gambit that just delays an inevitable bankruptcy filing.
“We see a low probability that the company will be able to raise equity and view this as a last gasp before filing for bankruptcy protection,” analysts at Wedbush Securities said in a research note Tuesday. “If the company completes the transactions, we estimate that the additional capital provides the company with just a few more quarters of room to turn around its operations.”
The plan “is a last roll of the dice from a company that is desperate to raise cash to provide some financial headroom to pay down debts and keep operations going,” said Neil Saunders, managing director at GlobalData.
“While a public offering seems like an odd device for a crisis-ridden company, Bed Bath & Beyond is desperate to avoid declaring Chapter 11 without having sufficient liquidity or potentially interested buyers in place,” Saunders said in a research note. “If it does, any bankruptcy judge could quickly force it into Chapter 7 liquidation where management would lose control and the company would effectively be terminated.”
After more than doubling in price on Monday when the plan was announced, Bed Bath & Beyond’s stock fell back to its earlier level, trading at about $3.22 a share on Tuesday.
Bed Bath & Beyond executives warned last month that the company could file for bankruptcy after seeing dismal sales during the past year. CEO Sue Gove blamed the poor financial performance on “lower customer traffic” and inventory constraints that resulted in shortages of merchandise on the shelves. In January, the company reported that its revenue during the holiday shopping season fell to a disappointing $1.26 billion, after it lost $393 million during the previous quarter, which ended November 26.
The company’s stock experienced a wave of popularity last year as Ryan Cohen, the billionaire founder of online pet food company Chewy, bought more than 7 million shares in the company. He sold those shares last August in a move that netted him $178 million and caused a wide selloff among meme stock investors.
The company made headlines again in September when its former chief financial officer died unexpectedly after jumping from a skyscraper in New York.
Retail experts said the once-popular retailer doomed itself years ago as a result of bad business decisions, including buying back too much of its own stock, being slow to transition to e-commerce and introducing private label products that few customers wanted.
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
A federal appeals court rejected Johnson & Johnson ‘s plan to use a legal strategy to push about 38,000 talc lawsuits into bankruptcy court, hampering the controversial tactic the company and a handful of other profitable businesses have used to move mass personal-injury cases to chapter 11.
The Third U.S. Circuit Court of Appeals on Monday dismissed the chapter 11 case of J&J subsidiary LTL Management LLC, which the consumer-health-goods giant created in 2021 to move to bankruptcy court the mass lawsuits alleging its talc-based baby powder products caused cancer.
LONDON — Struggling U.K. regional airline Flybe collapsed for the second time in three years Saturday, putting jobs on the line and leaving passengers stranded.
The airline initially slumped into bankruptcy in March 2020, shedding 2,400 jobs, as coronavirus restrictions decimated the travel industry. It relaunched in April last year, flying many of the same routes out of Belfast, Birmingham and London Heathrow.
In a statement, the grounded flyer said it had called in bankruptcy accountants again, and warned passengers not to travel to airports as all flights were now canceled, including its international routes from Switzerland and the Netherlands.
The U.K’s Civil Aviation Authority said passengers should “make their own alternative travel arrangements via other airlines, rail or coach operators,” leaving customers with lengthy and potentially expensive trips to get home.
CAA consumer director Paul Smith said: “It is always sad to see an airline enter administration and we know that Flybe’s decision to stop trading will be distressing for all of its employees and customers.”
Flybe returned to the skies less than 12 months ago with a plan to operate up to 530 flights per week across 23 routes. Its business and assets were purchased in April 2021 by Thyme Opco, which is linked to U.S. hedge fund Cyrus Capital.
The U.K. government said that its immediate priority would be to support anyone trying to get home and those who have lost their jobs.
“This remains a challenging environment for airlines, both old and new, as they recover from the pandemic, and we understand the impact this will have on Flybe’s passengers and staff,” it said.
“The Civil Aviation Authority is providing advice to passengers to help them make their journeys as smoothly and affordably as possible.
It added that most of Flybe’s destinations were within the U.K., so alternative means of transport were available.
Colombo, Sri Lanka – More than 180 prominent economists and development experts from around the world have made a global appeal to Sri Lanka’s financial lenders to forgive its debt, even as other experts are not convinced it is the best way forward for the island nation.
According to World Bank estimates, Sri Lanka has an external debt burden of more than $52bn as of December. Of that, nearly 40 percent is owed to private creditors, including financial institutions, while the rest is owed to bilateral creditors where China (52 percent), Japan (19 percent) and India (12 percent) are the largest ones.
Colombo defaulted on its debt repayments in April and negotiated a $2.9bn bailout with the International Monetary Fund (IMF).
But the IMF will not release the cash until it feels that the island nation’s debt is sustainable.
Now several prominent academics and economists, including Thomas Piketty who wrote the bestseller Capital, Harvard University economist Dani Rodrik and Indian economist Jayati Ghosh have issued a statement (PDF) calling for the cancellation of Sri Lanka’s debt by all external creditors and measures to stem the illicit outflow of capital from the country. The statement was put together by the “Debt Justice” campaign group, a global movement to “end unjust debt and the poverty and inequality it perpetuates”.
The private investors who lent at high interest rates to corrupt politicians must face the consequences of their risky lending by cancelling the debt, the academics said in the statement.
The academics have accused private creditors of contributing to Sri Lanka’s first-ever sovereign debt default as they accrued “a massive profit” by charging a premium to lend. Therefore, they said, the private lenders who benefitted from higher returns must be “willing to take the consequences” of their actions, meaning cancelling the debt and forfeiting the loans.
But not everyone agrees with this suggestion.
WA Wijewardene, a former deputy governor of the Central Bank of Sri Lanka, says that should the debt cancellation plan actually go through, it might lead to the collapse of the current global financial system.
Many of the academics who have signed the said statement are not economists, he told Al Jazeera.
“It is a galaxy of academics belonging to the social sciences field. As such, it needs to be critically appraised because, if accepted for Sri Lanka, it in fact provides a blueprint for a new world economic order.”
He added: “The present economic order is an interdependent, interconnected system. If you break this, the world will collapse. You don’t know what would happen thereafter.”
The ongoing economic crisis has left at least 8 million Sri Lankans as ‘food insecure’ [File: Eranga Jayawardena/AP Photo]
Wijewardene told Al Jazeera that he was surprised that Dani Rodrik, “who was a strong advocate for Washington Consensus, ie neo-liberal economic reform throughout the world” and Thomas Piketty, “who is from the opposite camp,” are on the same platform calling for debt cancellation.
Instead, he said, these academics and economists “should argue for the accountability to be established”.
“Money borrowed has been wasted or appropriated by rulers, leaving [out] people who haven’t benefitted from them. Those rulers should be made accountable for the losses and we should fight to establish a governance system in which they should be prosecuted for their crimes,” he said.
Wijewardene added that the cancellation of debt would not benefit the people but “the corrupt, despot” leaders.
“Corrupt despots have already benefitted from the money borrowed. When debt is cancelled, they don’t have to repay and can continue to borrow more and use that money for private gains. This is known as the moral hazard problem in economics; that when someone has taken responsibility for your liabilities, you have no incentive to take even the minimum precautions to minimise it,” he said.
Time for bilateral creditors to step up
For now, Nandalal Weerasinghe, the head of the Sri Lanka Central Bank, has urged China and India to come to an agreement over reducing the country’s debt.
“We don’t want to be in this kind of situation, not meeting the obligations, for too long. That is not good for the country and for us. That’s not good for investor confidence in Sri Lanka,” Weerasinghe told the BBC recently.
On Friday, India’s Foreign Minister S Jaishankar, while on a two-day visit to Sri Lanka, said that New Delhi had extended financing assurances to the IMF to clear the way for Sri Lanka to move forward but did not specify what those assurances were.
India’s Foreign Minister S Jaishankar (left), seen shaking hands with Sri Lankan President Ranil Wickremesinghe, told Sri Lanka that his country has given financial assurances to the IMF to facilitate a bailout plan [File: Sri Lankan President’s Office via AP]
On the heels of India’s assurance, China has offered a two-year moratorium, according to Sri Lanka’s Sunday Times newspaper.
In a letter to President Ranil Wickremesinghe, the Exim Bank of China, responsible for much of the loans given to Sri Lanka, said the two-year moratorium would be a short-term suspension of the debts owed to China while asking all Sri Lanka’s creditors to get together to work out medium-term and long-term commitments.
China is yet to make any official statement in this regard.
The assurances come on the eve of a Paris Club meeting of Sri Lanka’s creditors to discuss debt restructuring measures as a prelude to the IMF funds.
The chances of China acceding to requests for a loan waiver are slim as similar demands will then come from other parts of the developing world where China is an active lender, said Dhananath Fernando, the chief executive officer of Advocata Institute, an economic policy think tank in Sri Lanka.
“When you offer a debt relief to one country, it is like a court order. Other countries will also like to get the same relief,” he told Al Jazeera.
Moreover, taxpayers in any country would not be happy to completely write off loans offered to another country, a sentiment pointed out by IMF Managing Director Kristalina Georgieva.
“It is the notion, and is actually very broadly shared by many officials and citizens in China, that China is still a developing country and therefore … they expect to be paid back because it is a developing country,” she said in a media roundtable earlier this month.
“So, a haircut in the Chinese context is politically very difficult,” but China understands that the equivalent of that can be achieved by stretching maturities, reducing or eliminating interest rates, and payments to ultimately reduce the burden of debt, she added.
Dismissing the call for debt cancellation as “impractical”, Advocata Institute’s Fernando said that all the creditors will eventually have to agree on either a haircut (reducing the debt payment), coupon clipping (asking the lenders to reduce or waive off interest rates on bonds), extending the maturity of the loans or a combination of all three.
The Japanese embassy in Colombo had not responded by press time to an Al Jazeera request for comment.
Trade unions join call to cancel debt
Meanwhile, supporting the call for debt cancellation, a trade union representing garment factory workers, a key employer and income generator in Sri Lanka, said the economic restructuring measures required by the IMF as part of its debt relief plan will have the Sri Lankan government privatise state-owned enterprises, impose new taxes and increase the tax rates.
None of these measures “would provide an answer to Sri Lanka’s present debt crisis,” said Anton Marcus, co-secretary of the Free Trade Zones and General Services Employees Union, in a statement. The academics’ call “should be further lobbied by all labour rights campaigners and global trade union federations when Sri Lanka’s export manufacturing and service sector is hard-pressed for orders that threaten employment on large scale, in a country that is burdened with spiralling cost of living,” Marcus said.
The World Food Programme estimates that 8 million Sri Lankans — out of a 22 million population — are “food insecure” with hunger especially concentrated in rural areas.
DOVER, Del. (AP) — The judge presiding over the bankruptcy of cryptocurrency exchange FTX has approved the company’s choice of a law firm representing it in the bankruptcy, despite concerns about potential conflicts of interest.
Judge John Dorsey on Friday granted a motion by FTX for the Sullivan & Cromwell law firm to serve as debtor’s counsel.
The ruling came after a Sullivan & Cromwell partner filed additional disclosures this week about the firm’s work for FTX entities and FTX founder Sam Bankman-Fried before the November bankruptcy filings. Those disclosures were made in response to concerns raised by the U.S. Trustee, which serves as a government watchdog in Chapter 11 reorganizations.
According to declarations filed by attorney Andrew Dietderich, the firm was paid millions of dollars for work on behalf of FTX starting in July 2021. That does not include bankruptcy-related retainers totaling $12 million. Of that amount, $3 million was paid to Sullivan & Cromwell for previous work.
Bankman-Fried has pleaded not guilty to charges that he illegally diverted massive amounts of customer money from FTX to Alameda Research, his cryptocurrency hedge fund trading firm.
Dietderich said in a hearing last week that Bankman-Fried instructed FTX co-founder and chief technology officer Gary Wang to create a secret “back door” that allowed Alameda to borrow from customers on the FTX exchange without their permission.
Wang and Carolyn Ellison, the former CEO of Alameda Research, have pleaded guilty to charges including wire fraud, securities fraud and commodities fraud and are cooperating with federal prosecutors.
Meanwhile, Dorsey signed an order Friday authorizing FTX to redact the names of all customers, and the addresses and e-mail addresses of non-individual customers, from court filings for at least the next 90 days.
FTX also is authorized to permanently keep secret the addresses and email addresses of individual creditors and equity holders. Dorsey also allowed FTX to maintain a veil of secrecy for at least the next 90 days over the names of individual creditors or equity holders who are citizens of the United Kingdom or European Union nations and covered under a consumer protection program known as the General Data Protection Regulation, or GDPR.
Lawyers for FTX have argued that its customer list is both a valuable asset and confidential commercial information. They contend that secrecy is needed to protect FTX accounts from potential theft and to ensure that potential competitors do not “poach” FTX customers.
Genesis’s two lending subsidiaries, Genesis Global Capital and Genesis Asia Pacific, have filed for Chapter 11 bankruptcy.
According to the announcement, the firm aims to enact “a global resolution to maximize value for all clients and stakeholders and strengthen its business for the future.”
In November 2022, Genesis Global Capital halted their operations, freezing withdrawals amidst a liquidity crisis that came as a result of the implosion of the FTX cryptocurrency exchange. The lending arm was FTX’s largest unsecured lender, with claims amounting to more than $226 million.
Bitcoin Magazine PRO described how the firm needed a liquidity injection of at least $1 billion dollars in order to save itself — but this did not happen. In January 2023, Genesis’ parent company, Digital Currency Group, was accused by Gemini President Cameron Winklevoss of using Genesis in an elaborate high-yield scheme which transferred the high-risk of these yield generating investments to Gemini’s Earn product users. Gemini Earn was earning this yield via Genesis, which, according to the statements made by Winklevoss, Gemini believed to be a reputable counterparty.
“Genesis has proposed a roadmap to an exit including a Chapter 11 plan that calls for a framework for a global resolution of all claims through, and the creation of, a trust that will distribute assets to creditors,” the filing describes. “All aspects of the restructuring process will be overseen by an independent special committee of the company’s board of directors.”
Genesis’ Interim CEO, Derar Islim, stated that “While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders.”
According to the filing, Genesis has more than $150 million cash on hand, “which will provide ample liquidity to support its ongoing business operations and facilitate the restructuring process.”
Bed Bath & Beyond Inc. has received a warning that it is not in compliance for continued Nasdaq listing because the company has not yet filed its Form 10-Q quarterly report with the Securities and Exchange Commission.
In an SEC filing Thursday, the troubled home-goods retailer said it had received the Nasdaq notice on Jan. 12. The notice has no immediate effect on the listing or trading of Bed Bath & Beyond’s BBBY, -4.09%
common stock on the Nasdaq COMP, +0.86%,
the filing said. “The Notice states that the Company has 60 calendar days from the date of the Notice, or March 13, 2023, to submit a plan to regain compliance with the Listing Rule,” Bed Bath & Beyond said in the filing.
Embattled crypto lender Genesis announced that it had filed for bankruptcy late Thursday, the latest firm to be taken amid a widespread rout among crypto companies driven by plunging prices and charges of fraud at major players like FTX.
Genesis, which froze customer withdrawals in November following the collapse of FTX, filed for Chapter 11 bankruptcy protection in federal court in Manhattan for its lending units, saying it was the best way for it to achieve “an optimal outcome for Genesis clients.”
“While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders,” said Derar Islim, Genesis’ interim chief executive, in a statement on the company’s website.
According to its bankruptcy filing, Genesis’ lending unit said it had both assets and liabilities in the range of $1 billion to $10 billion and had over 100,000 creditors. The firm said it had about $150 million in cash on hand to support its operations during restructuring.
Genesis was the main partner of Gemini’s “earn” program, in which its retail investors received payments for allowing their crypto assets to be loaned out to others.
Cameron Winklevoss welcomed Genesis’ bankruptcy filing, saying it would provide Gemini a better venue for getting its clients’ money back.
“We will use every tool available to us in the bankruptcy court to maximize recovery for Earn users and any other parties within the bankruptcy court’s jurisdiction,” he wrote in a post on Twitter.
Both Genesis and Gemini were charged by the Securities and Exchange Commission last week with illegally selling securities to investors through the Earn program.
Genesis and its parent company, Digital Currency Group, had said they were seeking outside investment to help bolster the books and pay customers back in the months before filing for bankruptcy.
As part of its restructuring, Genesis said it would seek to possibly sell the company and also continue to look for additional investment.
