By Ciara Linnane James Rogers
Bed Bath & Beyond Inc. has been notified that its stock will be delisted from the Nasdaq following the troubled home goods retailer’s bankruptcy.
According to a statement released by Bed Bath & Beyond BBBY late Tuesday, the Nasdaq COMP informed the company that its stock would be suspended at the opening of business on May 3. Bed Bath & Beyond also announced the cancellation of a special meeting of shareholders scheduled for May 9 and is withdrawing its proxy statement filed with the Securities and Exchange Commission on April 5.
In the April 23 SEC filing that announced its bankruptcy, Bed Bath & Beyond said that it would not appeal a Nasdaq delisting notice. Bed Bath & Beyond was expecting the move as it is using a brief window to seek a buyer for some or all of its assets and then plans to liquidate and close its stores.
Shareholders still hold shares in a company after the stock has been delisted, although the stock typically plunges in the wake of a delisting notice. “A delisted stock often experiences significant or total devaluation,” explains law firm Robbins LLP, on its website. “Therefore, even though a stockholder may still technically own the stock, they will likely experience a significant reduction in ownership. In some cases, stockholders can lose everything.”
Delisted stocks can also continue trading in over-the-counter markets such as the Pink Sheets. “However, the lower barriers to entry on the OTC means higher risks of fraud and less transparency into a company’s operations,” added Robbins.
“Bankrupt companies typically have the letter ‘Q’ appended to the end of their stock symbols to denote the bankruptcy,” according to FINRA, in a blog post. Trading after bankruptcy can be “a high-risk gamble,” FINRA notes.
MarketWatch has reached out to Bed Bath & Beyond for comment on whether it plans to move its stock to an over-the-counter market.
Bed Bath & Beyond’s stock has fallen 57% since it announced its bankruptcy, and hit a record low of 12 cents Wednesday.
Bed Bath & Beyond’s bankruptcy follows a troubled couple of years marked by strategic missteps, cash burn, challenging underlying business trends and the impact of the COVID-19 pandemic.
The company and “certain of its subsidiaries” are now operating their business and managing their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court, according to the SEC filing. Debtor-in-possession, or DIP, financing lets companies keep operating in chapter 11 bankruptcy.
The company has entered into a $240 million DIP term loan credit facility from Sixth Street Specialty Lending Inc.
TSLX , Sixth Street Lending Partners and TAO Talents, if approved by the bankruptcy court.
“The delisting of the Common Stock would not affect the Company’s operations or business and does not presently change its reporting requirements under the rules of the Securities and Exchange Commission,” said Bed Bath & Beyond, in the filing.
