Goodbye, Overstock. Hello…Bed Bath & Beyond?
The future of Buybuy Baby is still up in the air.
Wednesday’s auction resulted in baby retailer Dream on Me Industries Inc. named as the stalking horse with a bid $15.5 million for Buybuy Baby’s intellectual property’s assets, with Everyday Health Media LLC as the backup bidder.
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To maximize value for parent Bed Bath & Beyond’s debtor estate, another auction will be held on Friday for Buybuy Baby as a going-concern. While Dream on Me in theory could walk away as the auction winner, the scheduling of a going-concern auction indicates that the bankrupt company expects other bidders to show up.
There’s been talk that Go Global Retail, the owner of kids brand Janie & Jack, has an interest in the company as a going concern, but what isn’t clear is how many stores it would want to keep open. Another possible bidder could be Sixth Street Partners, a Bed Bath & Beyond lender holding more than $500 million in debt it could use as a credit bid if it doesn’t like how the auction unfolds.
Credit bidding isn’t new. To the chagrin of creditors, Sears Holdings Corp.’s former chairman hedge funder Edward S. Lampert used a credit bid to snag the Sears and Kmart nameplates as going concern operations in a $5.2 billion offer at auction.
Creditors in the Sears bankruptcy would have preferred a liquidation because they thought Sears Holdings had more value dead than alive. But bankruptcy courts tend to favor going-concern offers in retail bankruptcies. In giving retailers a second chance at life, these deals keep workers on payrolls. And the benefits extend to include upstream supply chain vendors, keeping many more businesses afloat.
In a separate prior auction, Overstock.com acquired the IP assets of Bed Bath & Beyond IP for $21.5 million in the retailer’s Chapter 11 bankruptcy. The online home retailer said it will rebrand itself using the Bed Bath & Beyond banner.
“I think it was a good acquisition for Overstock. It gets them into a segment of the market that they’re not currently servicing, such as small appliance and home decor. And it gives them the ability to reinvent themselves brand-wise to move away from being known as a retailer for closeouts,” said Mark Brutzkus, a partner at the law firm Stubbs Alderton & Markiles, who chairs the consumer products practice group and represents clients across a range of business sectors.
He floated the idea that Overstock could eventually license the Bed Bath & Beyond name for international business.
