New Money Problems for Bed Bath & Beyond
Bed Bath & Beyond will pay severance to 1,300 workers after it tried to get out of taking responsibility.
The cash-strapped home retailer ignited a firestorm in March when planned layoffs made headlines. Bed Bath & Beyond said a first round of layoffs would terminate workers on April 9, a day before an expanded state layoff regulation went into effect. The timing allowed the company to skirt a new requirement effective April 10 that guarantees one week of severance for each year worked at the company.
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Bed Bath & Beyond representatives did not respond to a request for comment by press time.
Northjersey.com, which first reported the updated severance payout, quoted N.J. State Sen. Joseph P. Cryan (D-Union) as noting that he hasn’t heard of any non-compliance following the post-WARN (Worker Adjustment and Retraining Notification) effective date. Cryan, who sponsored the expanded law, was an early critic of the retailer’s timing of its layoff notice. The report cited public records indicating the severance payment.
It would appear that the bankrupt retailer is adhering to the state regulations for layoffs after April 10. However, it wasn’t clear what would happen to those who were part of the April 9 announcement. At that point in time, the company wasn’t obligated to pay severance. Moreover, now that it is in bankruptcy, if they were entitled to benefits, they might be classified as unsecured creditors.
The April 9 layoffs prompted former employee Michael Palmeri to file a lawsuit seeking class-action status on behalf of himself and others claiming Bed Bath & Beyond violated the WARN act. The suit was put on hold when Bed Bath & Beyond filed for Chapter 11 bankruptcy on April 23.
Bed Bath & Beyond is also a defendant in a lawsuit, also temporarily on hold, filed by ex-CEO Mark Tritton, who accused the company of failing to pay some of his $6.8 million severance. And it was sued by Sparx Logistics USA Ltd. for breach of contract related to two agreements in which the retailer’s alleged delay in collecting shipping containers resulted in millions of fees incurred by the shipper.
Bed Bath & Beyond is liquidating operations while also trying to find a buyer.
The Union, N.J.-based chain is trying to claw back $31.7 million from container shipping company OOCL for fees and other surcharges when its subsidiary allegedly failed to meet minimum quantity commitments under two service contracts, according to a complaint filed with the Federal Maritime Commission.
Bed Bath & Beyond’s money problems seem to have infected a one-time subsidiary as Christmas Tree Shops Inc. and parent Handil Holdings on Friday filed Chapter 11 petitions in Delaware. Bed Bath & Beyond sold the nameplate to Handil in October 2020 as the home retailer tried to slim down by selling off One Kings Lane, PersonalizationMall.com and Linen Holdings. Bed Bath & Beyond officially offloaded the home and decor specialty chain Cost Plus World Market in January 2021.
Christmas Tree Shops’ bankruptcy petition listed estimated assets at between $50 million to $100 million and estimated liabilities at between $100 million and $500 million. Its top 30 largest unsecured creditors include a number of vendors, freight firms and landlords.