Former Bed Bath & Beyond Inc. employees say they have received their delayed severance pay as the troubled retailer catches up on overdue payments after securing an against-the-odds equity deal last week.
(Bloomberg) — Former Bed Bath & Beyond Inc. employees say they have received their delayed severance pay as the troubled retailer catches up on overdue payments after securing an against-the-odds equity deal last week.
Some of the former employees said they received their lump-sum severance payments at the end of last week. Those payments had been delayed since at least mid-January, when Bed Bath & Beyond said it was dismissing an unspecified number of employees to continue to cut costs.
Some former employees received an email on Feb. 8 from the human-resources department that read, in part: “Funds are being processed and expected to be transferred to the bank account associated with your payroll information,” according to copies of the email viewed by Bloomberg News. “We apologize for the delay and sincerely appreciate your patience as we have worked to resolve.”
Other ex-employees, who were let go last year and have been receiving their severance pay in installments, were told via a similar email from Bed Bath & Beyond’s human-resources department that they would start to receive their payments this week, according to copies of the email viewed by Bloomberg News. The ex-staff members asked not to be identified talking about internal company communications.
In a statement, a Bed Bath & Beyond spokeswoman said, “We are transforming our company around a smaller and stronger store footprint and omni-always approach that is fully equipped to meet our customers’ needs.” She added that the company was taking steps, including reducing the workforce, “to enhance our cost base, improve our financial position, and enable Bed Bath & Beyond to serve our customers well into the future.” She declined to comment on the severance payments or the number of employees who have been fired this year.
Bloomberg News reported on the delayed severance pay on Feb. 2, as Bed Bath & Beyond was also falling behind on payments to its banks and bondholders and facing the possibility of filing for bankruptcy protection. The retailer avoided a Chapter 11 filing by securing a last-minute equity deal on Feb. 6.
The deal, which aims to raise as much as $1 billion over an unspecified period, is underpinned by anchor investor Hudson Bay Capital Management, a New York-based hedge fund, Bloomberg News has reported. Some of the company’s suppliers, as well as analysts, have said the capital infusion gives Bed Bath & Beyond some financial breathing room but that they still expect it to eventually file for bankruptcy.
Since launching an initial part of the equity raise last week, the beleaguered retailer has made good on the defaulted loan payments to its banks but as of Monday hadn’t made the overdue interest payments to bondholders, according to people familiar with the matter. After defaulting on the interest payments, the retailer is in a grace period that lasts through March 3. The Bed Bath & Beyond spokeswoman declined to comment on the company’s payments to banks and bondholders.
(Updates with bondholder payment status in final paragraph.)
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