February 10, 2023
BBB Canada Ltd., a Toronto, Ontario-based retailer that sells a wide assortment of merchandise in the home, baby, beauty and wellness markets, obtained CCAA protection on February 10. A stay of proceedings was also ordered in favour of Bed Bath & Beyond Canada L.P., of which the company is the general partner and 99% unitholder, as well as the company's US parent, Bed Bath & Beyond Inc. ("BBBI"). The Bed Bath & Beyond group has suffered significant net losses since 2018, which were compounded by the COVID-19 pandemic and the broader economic downturn. Bed Bath & Beyond's situation significantly worsened throughout 2022, with declining year-over-year sales in both the US and Canada, multiple credit rating downgrades, cash flow constraints, and significant inventory reductions. In June 2022, the group's new management embarked on an aggressive campaign to preserve cash, reduce costs and strengthen the balance sheet. By August 2022, Bed Bath & Beyond believed it was well-positioned for success. However, the sudden passing of BBBI's CFO left the group with a significant leadership gap at a critical juncture in its restructuring efforts. A marketing process conducted by Lazard failed to identify a going concern solution for Canada. BBBI raised about $225 million in an equity offering and may get another $800 million over the next 10 months, which will provide it with additional time to continue its turnaround efforts for the US outside of a bankruptcy filing. However, even with the offering, the group has concluded that there is not enough capital available to restructure both its business in the US and Canada. A&M was appointed Monitor. Osler is counsel for the company, Bennett Jones is counsel for the Monitor, McMillan is counsel for Sixth Street Specialty Lending, and Norton Rose Fulbright is counsel for JPMorgan Chase Bank.
By Dina Milivojevic
