Big Lots' $707.5M Chapter 11 Converts to Chapter 7 After Gordon Brothers Sale

Big Lots entered chapter 11 with a signed $620 million going-concern sale and $707.5 million in committed financing, and exited fourteen months later as a chapter 7 liquidation after its private-equity buyer withdrew, a replacement stalking horse was supplanted, and administrative costs exceeded the estate's resources. The discount retailer filed for bankruptcy on September 9, 2024 in the U.S. Bankruptcy Court for the District of Delaware under lead case 24-11967, alongside 18 affiliated debtors. The going-concern sale strategy gave way to an estate-managed liquidation in which the Big Lots name and a fraction of the footprint survived under a new operator while the rest of the chain was wound down and the remaining cases converted to chapter 7 on November 10, 2025.

Debtor	Big Lots, Inc. (19 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-11967
Petition Date	September 9, 2024
Conversion Date	November 10, 2025 (chapter 7)
Scale at Filing	1,300+ stores, ~27,700 employees, 48 states
Prepetition Funded Debt	~$556.1 million (ABL + term loan)
DIP Financing	$707.5 million ($550M DIP ABL + $157.5M DIP term, incl. $35M new money)
Sale Outcome	Substantially all assets sold to Gordon Brothers Retail Partners; brand and partial footprint to Variety Wholesalers
Chapter 7 Trustee	Alfred T. Giuliano
Claims and Noticing Agent	Kroll Restructuring Administration LLC

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United Furniture Collapse and Discretionary Pullback

Big Lots operated as a U.S.-only home-discount retailer selling furniture, home décor, pantry and grocery items, pet supplies, and seasonal goods through more than 1,300 stores across 48 states. The First Day Declaration of Jonathan Ramsden described an enterprise of 18 direct or indirect subsidiaries, roughly 27,700 employees, and five regional distribution centers in Alabama, California, Ohio, Oklahoma, and Pennsylvania, none of the workforce unionized. It was one of the larger U.S. retail filings of 2024 by footprint and headcount.

Ramsden's declaration attributes the filing to a combination of intense retail competition, the shift toward e-commerce, inflation and higher interest rates that pressured discretionary spending by the retailer's core customer, and prolonged declines in comparable sales and margins. The declaration also identifies a company-specific trigger: the 2022 collapse of United Furniture Industries, Big Lots' largest supplier and the primary vendor for its Broyhill brand. United Furniture represented about 6% of Big Lots' 2022 merchandise purchases, and its failure forced the retailer to replace a key furniture source while already under liquidity pressure.

The company had moved to shore up liquidity before the petition. The First Day Declaration described a July 2023 sale-leaseback transaction that raised hundreds of millions of dollars through the sale of a distribution center and owned store locations, and Big Lots had already begun rationalizing its footprint with store closures in the period leading into the filing.

Prepetition Capital Structure and ABL Facility

At the petition date, Big Lots reported roughly $556.1 million of funded debt concentrated in two facilities. The First Day Declaration described approximately $433.6 million outstanding under an asset-based revolving loan facility and about $122.5 million under a term loan, with both facilities scheduled to mature on September 21, 2027.

Prepetition ABL Facility	~$433.6 million outstanding
Prepetition Term Loan Facility	~$122.5 million outstanding
Total Funded Debt	~$556.1 million
Maturity (both facilities)	September 21, 2027

The first-day declaration framed the chapter 11 cases as a sale process rather than a standalone balance-sheet restructuring, with the going-concern sale to Nexus Capital already negotiated when the petitions were filed.

DIP Financing and the ABL Roll-Up

The Final DIP Order authorized a $707.5 million DIP package comprising a $550 million DIP ABL facility administered by PNC Bank, N.A. and a $157.5 million DIP term facility administered by 1903P Loan Agent, LLC, including $35 million of new-money term loans. The structure implemented a layered roll-up: a creeping and then full roll-up of the prepetition ABL obligations, an interim $75 million term roll-up, and a final roll-up of the remaining prepetition term obligations as the DIP went final.

Total DIP Authorized	$707.5 million
DIP ABL Facility (PNC Bank, N.A.)	$550 million
DIP Term Facility (1903P Loan Agent)	$157.5 million
New-Money Term Loans	$35 million
Interim Term Roll-Up	$75 million

The adequate-protection package granted the prepetition lenders replacement and additional liens, cash payments covering principal, interest, fees, and agent expenses, and section 507(b) superpriority protection if the package proved insufficient, with DIP liens and claims subordinated to a carve-out. The Final DIP Order preserved a challenge period around the prepetition liens and claims and reflected the early formation of the creditors' committee. The financing was sized to fund operations through a competitive sale process while the company executed store closings in parallel.

From Nexus to Gateway to Gordon Brothers

Big Lots entered the case with a signed stalking-horse agreement. The first-day declaration described a going-concern sale to Nexus Capital Management LP under an asset purchase agreement carrying a stated $620 million purchase price, intended to anchor a competitive chapter 11 auction. The company paired that path with about $707.5 million of financing to keep stores operating while it marketed the business.

Store closings. Big Lots sought store-closing authority early in the case. The court approved procedures authorizing liquidation-style advertising, a notice-and-objection process to add stores to the closing list, and consumer-data protections as locations shut down. The closure program accelerated through late 2024, with multiple waves of location lists circulating publicly, including articles that published full store lists as the footprint contracted.

Gateway as replacement stalking horse. The stalking-horse position did not stay with Nexus. By October 25, 2024, the court entered a Bidding Procedures Order naming Gateway BL Acquisition, LLC as stalking horse. The order set a November 6, 2024 sale-objection deadline and a November 12, 2024 sale hearing, directed the debtors to continue their prepetition marketing effort and stay on track with DIP milestones, and authorized break-up fee and expense-reimbursement protections that would become administrative claims if earned — without superpriority status and subject to the carve-out and wind-down budget.

The Nexus deal failure and the GBRP sale. In December 2024, the planned private-equity transaction fell through and Big Lots commenced going-out-of-business sales. On January 2, 2025, the court approved a transaction with Gordon Brothers Retail Partners through the Gordon Brothers Sale Order, authorizing the debtors to enter the GBRP asset purchase and agency agreement, approving a free-and-clear transfer of substantially all assets, and approving assumption-and-assignment mechanics for executory contracts and leases. The order found adequate assurance of future performance for assigned contracts and expressly provided that it would remain binding even if the cases later converted to chapter 7. Gordon Brothers' own communications described completing the Big Lots purchase and facilitating a going-concern outcome for part of the platform.

The Gordon Brothers structure layered two transactions: a court-approved asset purchase transferring substantially all assets to Gordon Brothers Retail Partners, and an operating arrangement under which Variety Wholesalers would continue using the Big Lots brand and operate a portion of stores and distribution assets. Retail trade coverage reported the transaction closing and Big Lots acquired out of bankruptcy as a partial going-concern outcome, with the broader footprint liquidated.

Gateway settlement. Gateway's displacement produced its own dispute. The January 31, 2025 Gateway Settlement Order resolved Gateway's claims over termination of the earlier stalking-horse APA, releasing Gateway's $2.5 million deposit and $1.5 million of a $2 million expense reimbursement, and converting the balance of the claimed bid protections into a $1.25 million allowed administrative-expense claim treated pari passu with other pre-closing administrative claims under the Gordon Brothers framework.

OhioHealth property sale. The estate also monetized real estate outside the main sale. On February 26, 2025, the court approved a separate private sale to OhioHealth Corporation through the OhioHealth Sale Order, authorizing a purchase and sale agreement covering certain assets, lease and city-agreement assumptions, and a new lease, with the assets transferred free and clear except for permitted title exceptions. That order likewise was drafted to survive a later chapter 7 conversion.

Variety Wholesalers and the Big Lots Brand Revival

The Variety arrangement preserved the Big Lots name and a subset of locations rather than the historical footprint. Reporting through early 2025 described Variety Wholesalers obtaining rights to use the Big Lots brand and reopening a portion of stores, with coverage tracking the reopening of 132 closed locations in phased waves beginning in spring 2025 and later figures rising above 200 stores as the program expanded.

Other retailers absorbed former Big Lots real estate as the broader footprint was liquidated. Tractor Supply acquired the leases for roughly 19 former Big Lots stores, and Aldi purchased several locations as sites reopened nationwide under new operators.

Conversion to chapter 7

The debtors moved to convert on October 24, 2025, stating in the Conversion Motion that administrative costs had exceeded initial projections by more than 300%, that they had completed monetization of remaining assets and an orderly wind-down, lacked resources to continue chapter 11 operations, and saw no reasonable path to confirming a plan. The motion provided for a segregated $3.5 million disputed administrative-expense reserve to be funded before conversion and maintained by the chapter 7 trustee for disputed pre-closing administrative and section 503(b)(9) claims.

The U.S. Trustee initially opposed the conversion motion, arguing the estate lacked sufficient assets to pay accumulated chapter 11 administrative expenses. The parties reached a settlement on the administrative cost issue, and the court approved the conversion in November 2025.

The court entered the Conversion Order on November 10, 2025, making conversion effective immediately, requiring final chapter 11 fee applications within 45 days, setting objections 14 days after that deadline, and directing turnover of remaining books and records to the interim chapter 7 trustee within 30 days of appointment. The trustee appointment notice identified Alfred T. Giuliano as the chapter 7 trustee, shifting the case from debtor-in-possession management to trustee-controlled liquidation of remaining assets and causes of action. Reporting described administrative-expense payments exceeding earlier forecasts and indicated that common equity would not recover value in the wind-down.

Professional Retentions and the Creditors' Committee

Big Lots retained a full retail restructuring bench: Davis Polk & Wardwell LLP as lead bankruptcy counsel and Morris, Nichols, Arsht & Tunnell LLP as Delaware co-counsel, with AlixPartners, LLP as financial advisor. Guggenheim Securities, LLC served as investment banker under a fixed monthly fee plus transaction-fee structure, and A&G Realty Partners, LLC handled lease and real estate work under a transaction-fee model tied to negotiated occupancy savings and lease outcomes. Kroll Restructuring Administration LLC served as claims and noticing agent.

The U.S. Trustee appointed the official committee of unsecured creditors on September 23, 2024. The committee selected McDermott Will & Emery LLP and Cole Schotz P.C. as co-counsel on September 24, 2024 and retained FTI Consulting, Inc. as financial advisor on September 25, 2024; the FTI retention application stated that the committee wanted restructuring expertise to monitor the debtors and their advisors and to maximize estate value. The committee remained active through the sale and later claims-resolution matters. That oversight included claims against the debtors' directors and officers: by September 2025, the committee had reached a $6.5 million settlement with Big Lots' board over allegations that directors mishandled the going-concern sale process — specifically the failed Nexus transaction — and a Delaware bankruptcy judge approved the settlement in October 2025.

Role	Firm / Party
Debtors' lead bankruptcy counsel	Davis Polk & Wardwell LLP
Debtors' Delaware co-counsel	Morris, Nichols, Arsht & Tunnell LLP
Debtors' financial advisor	AlixPartners, LLP
Debtors' investment banker	Guggenheim Securities, LLC
Debtors' real estate advisor	A&G Realty Partners, LLC
Claims and noticing agent	Kroll Restructuring Administration LLC
UCC co-counsel	McDermott Will & Emery LLP
UCC Delaware counsel	Cole Schotz P.C.
UCC financial advisor	FTI Consulting, Inc.
Chapter 7 trustee (post-conversion)	Alfred T. Giuliano

Key Timeline

Date	Case Milestone
Sep. 9, 2024	Chapter 11 petitions filed; First Day Declaration submitted
Sep. 23–25, 2024	Creditors' committee appointed; McDermott/Cole Schotz and FTI retained
Oct. 22, 2024	Final DIP order entered
Oct. 25, 2024	Bidding procedures order entered naming Gateway BL Acquisition as stalking horse
Dec. 2024	Nexus transaction abandoned; going-out-of-business sales commence
Jan. 2, 2025	Gordon Brothers Retail Partners sale approved
Jan. 31, 2025	Gateway settlement reduces bid-protection recovery to a $1.25M administrative claim
Feb. 26, 2025	OhioHealth private property sale approved
Oct. 24, 2025	Debtors move to convert to chapter 7
Nov. 10, 2025	Conversion order entered; Alfred T. Giuliano appointed trustee

Frequently Asked Questions

When and where did Big Lots file for chapter 11?

Big Lots filed for bankruptcy on September 9, 2024 in the U.S. Bankruptcy Court for the District of Delaware, under lead case 24-11967 with 18 affiliated debtors.

What did Big Lots cite as the causes of its bankruptcy?

The first-day declaration cited retail competition, the shift to e-commerce, inflation and higher interest rates pressuring discretionary spending, and weakening comparable sales. It also pointed to the 2022 collapse of United Furniture Industries, the company's largest supplier and the primary vendor for its Broyhill brand.

How much DIP financing did Big Lots obtain, and who provided it?

The court approved $707.5 million of financing, structured as a $550 million DIP ABL facility administered by PNC Bank and a $157.5 million DIP term facility administered by 1903P Loan Agent, including $35 million of new money. The package carried a layered roll-up of the prepetition ABL and term obligations.

What happened to the proposed Nexus Capital sale?

The planned private-equity transaction with Nexus Capital fell through in December 2024, after which Big Lots commenced going-out-of-business sales. A subsequent stalking-horse process named Gateway BL Acquisition before the assets were sold to Gordon Brothers Retail Partners.

Who ultimately bought Big Lots, and what was preserved?

The court approved the Gordon Brothers Retail Partners transaction on January 2, 2025, with Variety Wholesalers continuing the Big Lots brand and operating a portion of stores. Coverage described Gordon Brothers completing the purchase and facilitating a going-concern path for part of the platform while the rest of the footprint was liquidated.

Why did the case convert to chapter 7, and did shareholders recover anything?

The debtors sought conversion as administrative costs escalated and no path to a chapter 11 plan remained, and the remaining cases converted to chapter 7 on November 10, 2025. The company warned that common equity would not recover value in the liquidation.

Who is the claims agent for Big Lots?

Kroll Restructuring Administration LLC serves as the claims and noticing agent and maintains the official claims register. The conversion order directed claims-agent handoff and records-turnover mechanics as administration shifted to chapter 7 trustee Alfred T. Giuliano.

For related coverage of discount and home retail restructurings, see ElevenFlo's reporting on the 99 Cents Only Stores liquidation, the JOANN 800-store wind-down, the At Home Group debt restructuring, and the American Signature furniture sale.