Your trips to the mailbox may have gotten less exciting in the past few months as you likely haven’t received the infamous blue and white 20% off coupons from Bed Bath & Beyond. Previously serving as the home of wedding registries and college furnishings, Bed Bath & Beyond is a Fortune 500 company that is now expected to file bankruptcy in the first quarter of 2023. In a January 5, 2023, statement, Bed Bath & Beyond President and CEO Sue Grove noted that the company is anticipating a net loss of approximately $385.8 million for the third quarter of the 2022 fiscal year.[1]
While Bed Bath & Beyond is not the only national retailer suffering from higher interest rates, the lack of government-backed, low interest loans, and softened consumer spending, its steady fall from financial grace paints a poor economic outlook for 2023.
But what does this have to do with you? Gutwein Law prides itself on representing business leaders and stakeholders, including landlords, vendors, and other secured and unsecured creditors. As a part of our forward-thinking representation, Gutwein Law is here to help creditors navigate the likely increase in commercial bankruptcy filings, whether you are a creditor of a Fortune 500 company or a local business.
First and foremost, creditors must be aware of the effects of the automatic stay. Serving as a lifeline for debtors and a tool to preserve a debtor’s assets for equal distribution, the automatic stay commences at the filing of a bankruptcy petition and prohibits most post-filing collection activities. Gutwein Law supports creditors participating in the bankruptcy distribution process by taking actions not barred by the stay, including filing proofs of claim, and by determining whether relief from the automatic stay is warranted.
Moreover, bankruptcy law allows debtors to either assume or reject contracts, including leases, and even assign them to potential purchasers of their property, usually even if the agreements include an anti-assignment clause. To assume a contract, a debtor must cure arrears and demonstrate it can perform under the contract in the future. However, if a contract is rejected, it is terminated and the creditor could be entitled to rejection damages. Similarly, even if your contract with a debtor provides for termination upon a bankruptcy filing, such a clause will be unenforceable under the Bankruptcy Code and the debtor will still be able to assume or reject the contract. Our team at Gutwein Law can help you evaluate your exposure and help you determine whether it is in your best interest for the leases and contracts to be assumed or rejected.
Gutwein Law can also help you navigate a Section 363 which allows debtors to sell property “free and clear” of most liens and encumbrances. With litigation, bankruptcy, real estate, and business law professionals across all Gutwein Law’s offices, our team can navigate the complexity of the sale process and ensure your interests as a creditor and/or buyer are represented and protected.
Gutwein Law offers attorneys with intimate knowledge of how business works and provides creditors with legally sound, strategic, and practical advice. While the bankruptcy arena can be intimidating and stressful for creditors, Gutwein Law’s collaborative style will ensure your interests are promoted at all stages of a bankruptcy proceeding. For more information, please don’t hesitate to reach out to me at kaylin.cook@gutweinlaw.com or give us a call at (317) 777.7920.
[1] https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-provides-business-update
