Buy Buy Baby stores are set to disappear in a last-ditch effort to save the chain and keep the company alive, CNBC has learned.
Brand management company Go Global Retail, which owns kid’s clothing company Janie and Jack, was eager to buy the beloved A shower in bed and more chain and keep it running, but ultimately failed to reach an agreement on the valuation, the company’s CEO Jeff Streader told CNBC.
Lender Sixth Street Partners, the essential creditor of Bed Bath & Beyond, determined it could recoup more losses than what Go Global was willing to offer by selling the Buy Buy Baby mental property, selling the leases and proceeding with a liquidation sale.
Dream on Me Industries, a little-known Latest Jersey retailer and certainly one of Buy Buy Baby’s former suppliers, won the chain’s trademark and digital assets for $15.5 million after Bed Bath & Beyond received no higher bids.
Go Global believed there was a path to closure as early as Monday, but ultimately couldn’t agree on a number with Sixth Street, Streader said.
“We were honest in our offer. Sixth Street wasn’t unreasonable, but there was a difference of opinion about the valuation,” he said. “We wish the winners of the IPR tenders good luck on their path.”
All in all, Go Global’s bid had the next dollar amount than Dream on Me, but not by much because “there was a large erosion of value in the last six weeks,” according to an individual close to the case, who spoke on the condition of anonymity because they weren’t authorized to publicly discussing the case.
Had the company’s offer been accepted, it might have had to put in additional capital at the time of the sale to keep the stores operating, and the way the offer was structured didn’t take into consideration the cost of Buy Buy Baby’s mental property, said one other person close to the matter. Whilst Sixth Street would favor the shops to be open, Bed Bath has not received a viable offer to allow this, the person said.
When the auction process began, Go Global was ready to offer a “significantly higher” price, certainly one of the people said. In May, the company sought additional $50 million in capital to support its bid, CNBC previously reported.
Nevertheless, nearly three months after liquidating sales at 120 Buy Buy Baby stores, there could be very little left to be auctioned off aside from mental property, empty stores, leases and remaining inventory, the source said.
Over the past few weeks, Bed Bath & Beyond has repeatedly pushed back and split up its bankruptcy-led Buy Buy Baby auction process to secure higher bids and find an organization willing to keep the stores open.
Nevertheless, every time the auction was delayed, it was only delayed by about every week, which “definitely deterred potential bidders or investors,” the source said.
“Most individuals cannot move that fast,” the source added.
During a hearing in federal bankruptcy court in Newark, Latest Jersey, on Tuesday, Judge Vincent Papalia approved the sale of the Buy Buy Baby mental property to Dream on Me because certainly one of the bidder’s employees, who appeared virtually via Zoom at the hearing, was seen smoking cigarettes on screen.
Lawyers for Bed Bath & Beyond said it was “unlucky” that they were unable to secure a buyer, as Papalia and other lawyers present at the hearing expressed disappointment that the network couldn’t be saved.
“I share the disappointment of the lack of going concern offers,” said Papalia.
“It is a shame, I feel each parts usually are not moving forward and that is disappointing. I had higher hopes, but sometimes those hopes don’t come true.”