National discount retail chain moving to Chapter 7 bankruptcy

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When a company closed due to to a bankruptcy, it used to mean the brand went away, at least for a little while. There have always been situations where a new owner might step in and save the brand, continuing to operate under its original name. That, for example, is what happened with David’s Bridal. In that case, the judge was very reluctant to accept the no-cash offer where the new owner simply took on some of the debt from the former owners. She allowed the deal to go through, however, partially because of the damage that would happen to brides who had orders with the chain, were it to liquidate. “It’s essentially this or nothing,” said U.S. Bankruptcy Judge Christine M. Gravelle when approving the no-cash sale to Cion Investment Corp., Reuters reported. Most of the time, however, if no offer comes through and a chain is liquidated, or essentially sold for parts, the brand disappears, at least for a little while. Companies including Modell’s Sporting Goods, Sports Authority, and Borders Books and Music were liquidated, and their brands, at least for now, have gone away. Big Lots, another retailer that been in a long liquidation process under Chapter 11 bankruptcy protection, is now moving into the final phase. Big Lots has had a complicated bankruptcy Big Lots experienced a bit of an odd Chapter 11 bankruptcy, as some of its stores closed and then reopened with a new owner, but under the Big Lots name. It has been a somewhat bizarre process where some communities literally saw their Big Lots have a going-out-of-business sale and then reopen a few weeks later. That wasn’t a trick; the chain sold some locations to Variety Wholesalers,which also bought the right to continue using the Big Lots name. That transaction gave Variety Wholesalers the right to reopen between a quarter and half of the chain’s roughly 800 stores. Customers, it should be noted, generally don’t know which parent company owns a chain. In this case, the merchandise mix did change slightly, but shoppers likely thought the chain simply came back from bankruptcy. Big Lots failed the first time, according to Sudip Mazumder, senior vice president North America at digital consultancy Publicis Sapient, who told PYMNTS that Big Lots, the “once stalwart” company in the retail discount landscape, has faced challenges in recent years. “The company’s traditional brick-and-mortar model, heavily reliant on closeout merchandise, became less appealing to a market increasingly seeking convenience, variety, and unique offerings,” Mazumder said. “The rise of eCommerce and shifting consumer preferences caught Big Lots off guard, leaving it struggling to keep pace.” More Retail: Discount chain closing locations in multiple states Top AutoZone exec makes a move shareholders should know about Amazon made a change to Prime shopping to take on Target, Walmart Variety Wholesalers believes it can build on the positive parts of Big Lots’ legacy. “The connection with the communities we serve, and the positive customer feedback has been more than we could have imagined,” said Variety Wholesaler Lisa Seigies in a press release. “This enthusiastic response reinforces our belief that taking Big Lots! back to the roots of what made it a huge success resonates with our customers. Providing great value will always be our core mission.” Now, with about 220 Big Lots reopened under Variety Wholesalers and 63 purchased by Ollie’s Bargain Outlet to be converted to that brand, the operators of the former chain have asked a judge to convert its bankruptcy from its current Chapter 11 filing to a Chapter 7 bankruptcy. Under its new name, Former BL Stores, Inc., already received approval to sell most of its assets to Gordon Brothers Retail Partners, LLC. “Following the sale, the company has been managing its assets as debtors-in-possession but now seeks to convert its bankruptcy cases to Chapter 7, which would involve liquidating remaining assets for creditors. A hearing for this conversion is scheduled for November 4, 2025, and if approved, the company will cease managing its assets and expects its common shares to be worthless,” TipRanks reported. Big Lots bankruptcy timeline