Big Lots: Chapter 11 Sale Process Ends in Chapter 7 Conversion

Big Lots’ chapter 11 case is a modern example of a rapid retail restructuring: a national discount chain entered bankruptcy with a pre-negotiated going-concern sale path, secured a $707.5 million debtor-in-possession financing package to fund operations, and immediately launched store-closing procedures as a parallel value preservation tool. The case then pivoted when the initial stalking-horse path did not proceed as planned, forcing a transition from “sale-and-save-the-platform” framing to an estate-managed liquidation that preserved only a portion of the footprint and the brand.

363 Sale, Store Closings, and Conversion to chapter 7

What Big Lots was at filing. Big Lots entered chapter 11 as a nationwide home-discount retailer selling a broad mix of furniture, home décor, pantry and grocery items, pet supplies, and seasonal categories. Public reporting described a chain of more than 1,300 locations and a workforce of roughly 27,700 employees at the time of the petition date, one of the larger U.S. retail filings of 2024 by footprint and headcount. The First Day Declaration described those figures and the company's operating footprint across 48 states. Big Lots paired the filing with a proposed sale to Nexus Capital and immediate store-closure motions.

Big Lots described a multi-quarter decline in operating performance in the period leading up to bankruptcy, and media coverage emphasized the macro context: consumers pulled back on discretionary home categories as inflation and higher interest rates hit the retailer’s core customer base. The company had also been shrinking its footprint before the petition date; reporting around the filing referenced hundreds of planned closures, and subsequent coverage tracked location-by-location closures and liquidation updates.

Store closures. Coverage quickly became store-list driven as the company’s plan to close locations expanded through 2024, including reporting that published location-by-location lists of affected stores and tracked updates as the case progressed.

Drivers of distress. Multiple sources reported that Big Lots blamed a combination of high inflation and high interest rates for the filing, and described long-running comparable-sales declines that had already pushed the company into store rationalization mode. Pre-filing liquidity. Court filings 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.

Capital structure at the petition date (court filings). At filing, Big Lots' reported funded debt centered on two facilities: an asset-based revolving loan facility (ABL) and a term loan. The First Day Declaration described total funded debt of roughly $556.1 million with a split between approximately $433.6 million of ABL borrowings and about $122.5 million under the term loan.

The initial strategy. On the petition date, public reporting described a proposed sale of “substantially all” Big Lots assets to Nexus Capital Management, and described the deal as valuing the transaction at roughly $620 million based on bankruptcy filings. In parallel, reporting emphasized that the company entered the case with financing commitments large enough to fund operations through a sales process, describing a financing package of about $707.5 million.

DIP financing. The Final DIP Order authorized a $707.5 million DIP structure comprised of a $550 million DIP ABL facility and a $157.5 million DIP term facility, with $35 million of new-money term loans. The order described roll-up features tied to refinancing or repayment of prepetition ABL obligations as the DIP went final. The DIP also embedded a budget and variance framework.

Store-closing procedures. Big Lots pursued store-closing authority early in the case. The court approved store-closing procedures that authorized liquidation-style advertising, created a notice-and-objection process to add stores to the closing list, and imposed consumer data protections as stores shut down.

Public reporting reflected that the closure program accelerated through 2024, with multiple waves of store lists circulating and location updates becoming part of the case’s public narrative, including articles that published full store lists as the footprint contracted. Bidding procedures and early milestones. The court's Bidding Procedures Order set an initial bid deadline, auction date (if needed), and a sale hearing timeline. The initial timeline contemplated late-October bidding and a mid-November sale hearing cadence.

The Nexus deal failure and shift to Gordon Brothers / Variety. In December 2024, reporting indicated that the planned private equity transaction with Nexus Capital fell through, and that Big Lots commenced “going out of business” sales as the sale path changed. The case then moved toward a Gordon Brothers-driven structure that preserved some value through an operating continuation path for part of the footprint, while the estate pursued broader liquidation of inventory and lease positions. Gordon Brothers’ own public communications described completing the Big Lots purchase and facilitating a going-concern sale, and other retail coverage described the resulting operating footprint as a partial preservation rather than a full-chain rescue, including coverage describing the sale closing and transaction framework.

The Gordon Brothers / Variety structure is best understood as two distinct transactions layered together: (i) an asset purchase approved by the bankruptcy court that transferred substantially all assets to a purchaser (Gordon Brothers Retail Partners), and (ii) an operating plan under which Variety Wholesalers would continue using the Big Lots brand and operate a portion of stores and distribution assets. Coverage varied on the precise number of stores preserved (with reports ranging from roughly 200 to 400 stores and associated distribution centers), but the consistent takeaway is that the Big Lots name and a subset of locations survived, while the broader footprint was liquidated.

Retail press described the transaction as “done” once the sale closed and framed the outcome as preserving part of the chain through a new operator while allowing the estate to liquidate the remainder, including coverage focused on the sale closing mechanics and the “go-forward” footprint. Other reporting emphasized that the Big Lots purchase was structured to facilitate a going-concern path for a portion of the platform even as liquidation continued elsewhere, including reporting on Big Lots being acquired out of bankruptcy. Gordon Brothers’ own announcement also described the deal as facilitating a going-concern sale outcome for part of the platform while the broader liquidation proceeded.

Reporting described Variety Wholesalers obtaining rights to use the Big Lots name and the ability to reopen or operate a portion of stores rather than maintaining the full historical footprint, including coverage describing the right to reopen a significant subset of stores.

Sale economics. The Sale Order described a purchase price framework that included payoff of DIP facilities (with an indicated floor), funding for "stub" rent and budgets for administration and wind-down, and a professional fee escrow. The order included professional fee escrow mechanics that required an initial deposit and subsequent weekly funding installments through late February 2025. Big Lots’ later conversion to chapter 7 reflects that late-case pressure. Reporting described administrative expense payments significantly exceeding earlier forecasts and suggested that the estate could no longer justify ongoing chapter 11 administration costs. The court ultimately converted the remaining cases to chapter 7, shifting administration to a trustee and changing the posture from debtor-in-possession management to trustee-controlled liquidation of remaining assets and causes of action.

Chapter 7 conversion. The Conversion Order converted the remaining cases to chapter 7 on November 10, 2025. The trustee appointment notice identified Alfred T. Giuliano as the chapter 7 trustee.

Reporting described administrative expense payments exceeding earlier forecasts, and coverage indicated that common equity would not recover value in the liquidation.

Key professionals. Big Lots retained a full retail restructuring bench. Court filings show Davis Polk & Wardwell LLP as lead bankruptcy counsel and Morris, Nichols, Arsht & Tunnell LLP as Delaware co-counsel, with AlixPartners as financial advisor. Guggenheim Securities was retained as investment banker under a fixed monthly fee plus transaction-fee structure, and A&G Realty Partners was retained for lease and real estate work under a percentage / transaction-fee model tied to negotiated occupancy savings, lease transactions, and related outcomes. On the unsecured creditor side, an Official Committee of Unsecured Creditors retained McDermott Will & Emery as committee counsel, with Cole Schotz as Delaware counsel and FTI Consulting as the committee’s financial advisor.

Post-sale brand and operations. Coverage described Variety Wholesalers obtaining rights to use the Big Lots name and reopening or operating a portion of stores, while the remaining stores were closed and liquidated. Reports on the post-sale path described the transaction as preserving a portion of stores and jobs.

Frequently Asked Questions

When did Big Lots file for chapter 11 bankruptcy?

Big Lots filed for bankruptcy protection on September 9, 2024.

Where was the Big Lots bankruptcy case filed?

The case was filed in the U.S. Bankruptcy Court for the District of Delaware.

How large was Big Lots at the time of filing (stores and employees)?

Reporting around the filing described a chain of more than 1,300 stores and roughly 27,700 employees.

What were the main reasons Big Lots cited for the filing?

Big Lots’ public framing emphasized a difficult operating environment, with inflation and higher interest rates pressuring consumer demand in discretionary home categories and contributing to prolonged comparable-sales declines.

How much DIP financing did Big Lots obtain, and what did it include?

Coverage at the outset of the case reported that Big Lots had commitments for about $707.5 million of bankruptcy financing, including $35 million of new funding from existing lenders.

What happened to the proposed Nexus Capital sale?

Retail coverage later reported that the planned private equity transaction with Nexus Capital fell through, coinciding with an expanded shift into store-closing and liquidation activity.

Who ultimately bought Big Lots’ assets, and what was preserved?

The sale process ultimately moved to a Gordon Brothers-led structure, and reporting described Big Lots’ assets being sold out of bankruptcy with a partial operating continuation path involving Variety Wholesalers and the Big Lots brand. Coverage described the closing and operating path in retail trade reporting and in Gordon Brothers’ own transaction announcement.

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

Later reporting described the estate seeking conversion to chapter 7 as administrative costs escalated and as the remaining cases moved from debtor-led administration to trustee liquidation, with articles describing the company’s view that shareholders were unlikely to recover in the wind-down.

Who is the claims agent for Big Lots?

Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more chapter 11 case coverage, visit the ElevenFlo bankruptcy blog.