Buried in the 48 pages – plus assorted appendixes – of Bed Bath & Beyond’s 8-K notice of bankruptcy filed with the Securities & Exchange Commission this weekend was the news that it had appointed its CFO, Holly Etlin, as its “chief restructuring officer.”
Maybe it’s legalese and standard operating procedure when a company files bankruptcy and the document does say that Etlin will be involved in “overseeing” a number of aspects of the company’s business from cash management, dealing with creditors and, curiously, “the Chapter 11 Cases and court-supervised liquidation and sale process.” That last point would suggest the fix is already in and BBB will certainly be liquidated.
But also in that statement is that she will be in charge of “the development of, or revisions to, the Company’s business plan.” OK, we’re not an attorney – and we don’t play one in the business press – but if a company is being liquidated why does it need to develop a business plan? Are we missing something? And, by the way, what has happened to the CEO, Sue Gove, who would normally be someone involved in these kinds of decisions? We know companies in bankruptcy bring on a restructuring chief, but BBB sure seems like it is being deconstructed not restructured, based on its public statements this weekend to both the courts and its customers.
Etlin, who also lost the “interim” part of her CFO title right before the bankruptcy filing, joined BBB in February from Alix Partners, the consulting firm that is usually knee-deep in troubled retailers and she is still listed as a managing partner of Alix on her LinkedIn profile. Indeed, also right before the filing, on April 21, Bed Bath signed a “certain engagement letter” with AP Services that includes working with Etlin. AP Services appears to be an arm of Alix.
In the meantime, trading in Bed Bath’s stock on Monday continued at a brisk rate even as the stock showed a 34% decline as of mid-day, down to its all-time low of around 19 cents a share. Trading volume was heavy at more than 450 million shares, which could be explained by short-stock traders buying to cover positions. Hard to see any other explanation for speculators looking to buy the stock, although there have been a few examples, including most recently Hertz, where investors made money on bankrupt company’s shares. In the bankruptcy notice to the SEC the company said it expects its stock to be delisted soon and that it will not contest such a move.
Will the stock continue to do unexpected things? Is a chief restructuring officer really contemplating a restructuring? What about BBB’s existing senior management, are they still on the job? And what are millions of shoppers going to do with billions of coupons.
Stay tuned, the Bed Bath & Beyond tragedy saga is far from over.