Restructuring and turnaround specialist Carol Flaton has joined the board of directors of Bed Bath & Beyond in what could be the final sign that the company is preparing to file for bankruptcy.
But it also could signal that the beseeched retailer is hoping to restructure after the chapter 11 filing, rather than enter into a chapter 7 liquidation.
The announcement on Flaton, made after the close of trading on Jan. 26 but effective two days prior, comes as the company said it had received notification from JPMorgan Chase Bank that it was in default on its loans and that it did not have sufficient resources pay back the loans. According to numerous published reports the bank is calling in the loans and requiring repayment immediately. Under such circumstances filing for bankruptcy is likely the only outcome Bed Bath will have and a filing could come as quickly as tonight or in the next several days.
And that is where Flaton comes in. According to her biography from Talen Energy whose board of directors she joined in November 2021, she “has over 30 years of experience in banking and finance, transformation and restructuring, and governance and risk management.” This biography says “from 2014 to 2019 Ms. Flaton was a managing director at AlixPartners (formerly known as Zolfo Cooper, LLC) specializing in restructuring and turnarounds. Prior to joining AlixPartners, she was a managing director in the restructuring practice of Lazard Freres (“Lazard”).
“At Lazard from 2008-2013, she advised debtors, creditors and equity holders engaged in restructurings, debt exchanges, 363 sales, acquisitions, refinancings and capital raises.”
Prior to Lazard, she was a managing director at both Credit Suisse First Boston and Citi, “responsible for distressed positions in the banks’ portfolios as well as being a senior member of the risk management teams.”
Another source listed her as “chief restructuring officer at Doral Financial Corp.” EQ Energy, a company where she served on the board in 2019 and 2020 wrote that “We believe that Ms. Flaton’s extensive knowledge in financial and reorganization matters and her experience as advisor to financially distressed companies brings valuable expertise to our Board.”
In the SEC filing on her joining Bed Bath, there are no specifics on her responsibilities and in fact it states “The Board of the Company will not appoint Ms. Flaton to any committees of the Board at this time.”
Last week eight of the nine existing board members sold all or most of their stock holdings in the company, another sign that bankruptcy could be imminent.
While the company’s stock has been slowly but surely declining with the occasional spikes due to market speculators, today’s news caused it to plummet more than 22%, closing at just over $2.52 a share. As recently as ten days it was more than double that, at $5.22 a share.