Mattress Bathtub considers submitting for chapter in New Jersey and strengthens authorized workforce

A “Store Closing” banner at a Bed Bath & Beyond store in Farmingdale, New York on Friday, January 6, 2023.

Johnny Milano | Bloomberg | Getty Images

bed bath beyond is building up its team of legal advisors as the struggling retailer prepares for a potential bankruptcy filing that would take place in New Jersey in the coming weeks, according to people familiar with the matter.

The company has hired the law firm of Cole Schotz to assist with a possible filing in the US Bankruptcy Court for the District of New Jersey, according to people who were not authorized to comment publicly on the matter. However, the situation remains fluid and plans may change, the people added.

Bed Bath was in talks to nail down financing that would keep it afloat if it filed for bankruptcy, CNBC previously reported. The company is also in the midst of a sale process in hopes of keeping its namesake chain and Buybuy Baby business afloat.

Still, the Union, NJ-based retailer has been moving toward filing for bankruptcy in its home state, an increasingly popular spot for Chapter 11 cases, the people said.

Earlier this week, fellow retailers party town filed for Chapter 11 bankruptcy protection with plans to restructure its balance sheet and move forward with a smaller footprint of stores. This application was filed in the US Bankruptcy Court in the Southern District of Texas.

A Bed Bath spokeswoman said the company does not comment on speculation or specific relationships and is working with advisors to regain market share and explore multiple avenues.

“We have a team, internally and externally, with proven experience in helping companies navigate complex situations successfully and grow stronger,” the spokeswoman said in a statement.

A representative for Cole Schotz did not respond to requests for comment.

The retailer has worked with other advisers to manage its financial woes, including Kirkland & Ellis, the law firm known for representing bankrupt companies. Kirkland & Ellis and Cole Schotz are also serving as legal counsel for crypto lender BlockFi, which filed for Chapter 11 protection in the New Jersey Bankruptcy Court.

Bed Bath also recently hired consulting firm AlixPartners as one of its advisors, replacing Berkeley Research Group, CNBC previously reported.

Despite efforts to stave off the landing in bankruptcy protection, a filing is likely in the coming weeks, the people said.

Earlier this month, Bed Bath warned of an impending bankruptcy as its turnaround plans fail to improve business and its balance sheet deteriorates. The retailer faces a heavy debt burden, falling sales and mounting losses.

On Thursday, Bed Bath said it received a notice from Nasdaq that it was noncompliant after it failed to file its quarterly earnings statement on time. The company said it was working to finalize and submit its report to restore compliance within 60 days.