To The Moon

WSB popular trading stock $Bed Bath & Beyond(BBBY)$ filed for Chapter 11 bankruptcy protection on April 23 after its last financing attempt failed earlier this month, marking the end of an era. Although BBBY has high trading activity in the secondary market, its market value is only slightly over $80 million, even less than a small PE fund.

Chapter 11 bankruptcy cases begin with filing a petition to the bankruptcy court where the debtor resides or conducts business. The petition can be voluntary and submitted by the debtor or involuntary and submitted by creditors who meet certain conditions. The court will help restructure the company's debts and obligations. In most cases, companies continue to operate normally during this time under what is called "debtor-in-possession." However, in cases involving fraud, dishonesty or extreme incompetence, a trustee appointed by the court may take over management of the entire bankruptcy process.

Of course, businesses or individuals applying for bankruptcy have an opportunity to propose a restructuring plan first which includes reducing their scope of operations to cut expenses and renegotiating debt. In some cases, plans involve liquidating all assets to pay off creditors.

Currently, BBBY says its joint stores under Bed Bath & Beyond and Buy Buy Baby brands will remain open temporarily but it has developed plans to liquidate inventory and close all stores. It will still seek financing during this period to keep up with expenses including paying salaries for about 14 thousand employees who are still working.

The main purpose of bankruptcy proceedings is selling assets to repay debtors so these stores under BBBY as well as their inventory may be sold off as quickly as possible. Inventory such as bedding may be discounted when sold while store locations themselves could benefit from rising real estate prices in recent years making them not necessarily discounted items themselves either way though according to latest financial reports show current liabilities at $18 billion USD exceeding current assets at $13.4 billion USD with $10.25 billion of that being inventory.

Therefore, creditors may not be optimistic about what they can ultimately receive. Equity investors can basically consider themselves at zero.

after delisting and the company's stock will first go to OTCPINK trading where remaining shareholder value is essentially negative so equity has no meaning except for speculation (perhaps some investors will still gamble on a big company acquisition but they are also limited to auctioning off assets which would first go towards paying back creditors).

From an investment perspective, there is no need to get involved unless you are a meme stock enthusiast.

Which stocks will benefit?

In the short term, clearing inventory will have an impact on all retailers as it involves clearance sales and discounts which could attract more price-sensitive consumers. Other retailers including Home Depot ( $Home Depot(HD)$ HD), Walmart ( $Wal-Mart(WMT)$ , Target ( $Target(TGT)$ ) and online retailer Wayfair ( $Wayfair(W)$ ) may face competition lasting up to one quarter.

In the long run, after clearing out stores in the same category such as Williams-Sonoma Inc( $Williams-Sonoma(WSM)$ ), Lovesac Co.( $Lovesac Co.(LOVE)$ ) and Wayfair( $Wayfair(W)$ ) may gain larger market share because they are direct competitors in home decor products while Walmart(WMT), Target(TGT), Costco( $Costco(COST)$ ) or even Amazon( $Amazon.com(AMZN)$ ) due to their diverse business types and large revenue scales might not see significant marginal effects but could still benefit somewhat.