Bed Bath & Beyond says it received default notice from JPMorgan

Bed Bath & Beyond said it received a default notice from JPMorgan Chase after it failed to prepay an overadvance and satisfy certain creditor protections.

Creditors are demanding immediate repayment of the company’s debt, according to a regulatory filing Thursday. Bed Bath & Beyond listed around $2.1 billion of obligations it owed as of November. The default notice also requires the company to cash collateralize certain debt and adds a 2% annual default rate interest penalty on obligations.

“At this time, the Company does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code,” the filing said.

The company has begun speaking with potential lenders that would fund the firm during bankruptcy proceedings, Bloomberg reported earlier.

[What would we lose if Bed Bath & Beyond throws in the towel(s)?]

A ubiquitous brand in the U.S., founded in 1971 in Union, New Jersey, Bed Bath & Beyond was once a staple of going-to-college shopping lists and wedding registries.

The firm’s decline has been years in the making and has accelerated in recent months as suppliers have become increasingly concerned about the retailer’s financial future and made demands to receive payments in advance. Other manufacturers have lowered their credit limits with the retailer to reduce the risk of not getting paid for their products.

That led to less merchandise on store shelves during the pivotal holiday season, which has exacerbated a vicious cycle of falling inventory levels, declining foot traffic and a decrease in revenue - which has made it harder, in turn, to pay suppliers.

Bed Bath & Beyond shares plunged as much as 35% to $2.10.

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Bloomberg’s Reshmi Basu and John J. Edwards III contributed to this report.