Given the company has over $4 billion in stated assets, there is a strong likelihood JP Morgan is repaid in full. Things like inventory and property may be lucky to see 50 cents on the dollar in repayment.Īccording to their recent regulatory filing, "As of November 26, 2022, the Company had (i) $550.0 million of borrowings outstanding under the ABL Facility and $186.2 million of outstanding letters of credit issued thereunder and (ii) $375.0 million of outstanding borrowings under the FILO Facility." These credit facilities are going to be the first in line to be repaid in bankruptcy, and they add up to over $1.1 billion in value. Another important thing to remember is that the asset value listed on the books is unlikely to be what is recovered in bankruptcy. They have been consistently burning through $200 million in assets per quarter, so it is likely their current assets are even lower than this. As of their November filing Bed Bath & Beyond listed $4.4 billion in assets and $5.2 billion in liabilities. To have an idea of who might be paid after bankruptcy the corporate balance sheet must be reviewed. (4) Shareholders - stock holders of the company only receive any compensation at the end of bankruptcy if all the above parties are paid in full. (3) Unsecured Creditors - typically bonds issued by the company, and these can be further ranked as senior or non-senior debt. (2) Employees - things like unpaid wages may have to be collected in bankruptcy. (1) Secured Creditors - loans that are backed by specific assets, similar to how a home mortgage is backed by the value of a house in foreclosure. Repayment in bankruptcy goes in the following order: In bankruptcy court proceedings the common shareholder is in the very back of the line to be repaid. They are the same existing shares that is in default. The important thing to remember is that this new symbol is not the new shares of the company. Upon filing bankruptcy a stock's symbol typically will change to have a "Q" added to the end of it notating that the company has defaulted. Reorganization in bankruptcy is greatly misunderstood by retail investors, so let's review how the process works. Due to a significant drawdown in assets over the past two years, it is unlikely that stockholders will receive any payout after bankruptcy. The default notice in combination with a bond interest payment due on February 1st means a bankruptcy filing is likely to be imminent. This past week Bed Bath & Beyond ( BBBY) received a default notice from JPMorgan on one of their primary credit facilities.
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