The home-goods retailer Bed Bath & Beyond Canada was granted creditor protection Friday by an Ontario court as it looks to wind down the business and liquidate its assets, following years of unprofitability.

“After consideration of all strategic alternatives … the Bed Bath & Beyond Group has determined that it is no longer in a position to provide financial and operational support to BBB Canada,” says the proposed monitor’s pre-filing report to the Ontario Superior Court of Justice.

Bed Bath & Beyond Group’s “revenues have been declining since 2018 in the wake of rapid changes in the North American retail industry,” the pre-filing report says. The group includes U.S.-based Bed Bath & Beyond, as well as its U.S. and Canadian subsidiaries. 

The spread of COVID-19, which shuttered retail stores across North America and prompted consumers to turn to online shopping, exacerbated the company’s financial challenges. The Canadian company’s inventory is “at historic lows” due to those issues, as well as supplier problems, according to an applicant’s factum.

In the nine months ended Nov. 26, 2022, the Canadian arm recorded a $99.5-million net loss. As of that date, it had assets with a book value of about $480.1 million and liabilities with a book value of about $429.7 million, “exclusive of the significant funded indebtedness guaranteed by [it] under the credit facilities,” the report says. 

The firm’s parent company, Bed Bath & Beyond, did not immediately respond to The Logic’s request for comment. 

The broader group shook up its leadership and secured more than US$500 million in credit facilities, but defaulted on payments in January after an unsuccessful holiday season, the report reads.

At the time, Bed Bath & Beyond raised the possibility of bankruptcy in the United States, but postponed that fate with US$225 million raised in an equity offering earlier this week, with the possibility of another US$800 million before the end of the year. “A failure to receive the full amount of proceeds … would likely force a bankruptcy filing by BBBI and its U.S. subsidiaries,” the report reads.

That raise has so far proved successful in keeping the U.S. business going. However, “no executable transaction” for the Canadian business that would bring in more than the anticipated liquidation value of the company’s assets has come forward, the report says, despite a third-party firm running a marketing process.

The Canadian company, which has 54 Bed Bath & Beyond stores in the country across nine provinces and 11 Buybuy Baby stores in four provinces, expects it can raise about $40.5 million from its inventory, furniture, fixtures and equipment, according to the report. It does not own the real estate, but it is leased by its general partner BBB LP. As of Jan. 31, BBB Canada had 387 full-time employees and 1,038 part-time staff. Once an order is granted, it gives the company the ability to temporarily lay off staff or terminate their employment.

Bed Bath & Beyond Canada expects to begin the sale of its assets in late February and complete it by the end of April.

Bed Bath & Beyond’s shares, which trade on the Nasdaq, have had a tumultuous year as part of the meme-stock phenomenon. They surged to nearly US$30 apiece last March after many Redditors bought in, following the lead of billionaire Ryan Cohen. 

It has since traded mostly in the single digits as it works on a turnaround plan that includes closing nearly 300 U.S. stores.