There is no denying that the economy has been turbulent since the pandemic, and businesses that rely on a brick-and-mortar presence are struggling to rise above these challenges and competition from faster, cheaper online retailers. In recent years, giants like Joann and Bed Bath & Beyond have fallen victim to market pressures and gone out of business using bankruptcy. Bankruptcy isn’t always the end of a business, especially if the business files under chapter 11. And that’s exactly the type of bankruptcy Big Lots used when it filed for bankruptcy protection on September 9, 2024.
Big Lots announced in January 2025 that it would be closing all of its 8 Arizona store locations. This was part of reducing its nationwide presence from about 900 stores to approximately 500 store locations. The Phoenix location already had plans to close, but this announcement made the future clearer for the Bullhead City, Casa Grande, Glendale, Kingman, Show Low, Sierra Vista, and Yuma locations. Around the same time, Macy’s, Kohl’s, and Party City all made plans to close store locations in Arizona. Some of the locations were part of the sale to Variety Wholesalers, which allowed relevant locations to continue operating under the same name. But there has since been a major update in Big Lots’ bankruptcy case. It was converted into a chapter 7 bankruptcy case in November 2025, and the brand has been approved for a no-cash sale to Cion Investment Group. Big Lots shareholders are expected to lose their stock value through this transaction.
A business relying on brick-and-mortar sales isn’t the only factor that presents challenges that can lead to bankruptcy in the current economy. And when these businesses struggle, their employees may see their hours cut or even face staffing reductions. Not everyone has a sufficient safety net to enter a job market like the one we’re in now. This could lead to the accumulation of high-interest debts like credit cards and personal loans. If you only see a future of yourself falling deeper and deeper into the hole, bankruptcy could be the solution to your financial issues. Create a powerful barrier between your assets and your creditors, and clear a path towards a clean slate. Learn more about filing for bankruptcy in Arizona today with Atlas Bankruptcy Lawyers. Call 602-649-4949 for your free consultation.
Personal Bankruptcy Chapter Conversion
Bankruptcy chapter conversions aren’t just a procedure for corporate debtors. Sometimes it becomes necessary for an individual debtor to change the chapter of bankruptcy they are using to discharge debts. Life can’t always be planned, and circumstances can change within the lifespan of a bankruptcy case. 11 U.S.C. § 706 provides for the conversion of a chapter 7 bankruptcy case. This statute allows a chapter 7 bankruptcy debtor to convert their case to a chapter 11, chapter 12, or chapter 13 bankruptcy case. Chapter 11 bankruptcy restructures debts with approval from a creditor committee. Chapter 12 bankruptcy is a type of bankruptcy specifically meant for fishermen and farmers. Chapter 13 bankruptcy is the second most common form of consumer bankruptcy behind chapter 7 bankruptcy, reorganizing debts into a payment plan based on the debtor’s disposable monthly income. The debtor must consent to a conversion to chapter 12 or chapter 13 bankruptcy. Interested parties besides the debtor can request a conversion to chapter 11 bankruptcy.
Bankruptcy conversion isn’t guaranteed, as the debtor must meet the eligibility requirements for the converted chapter, or the conversion will not be granted. This typically requires having sufficient income for the converted type of filing, whereas chapter 7 income eligibility generally involves proving household income falls below a certain level. A chapter 7 debtor converting to chapter 13 bankruptcy due to having too high of income is one of the most common examples of consumer bankruptcy conversion. Per 11 U.S.C. § 348, asset valuations and other factors will be determined as of the date of the original petition filing.
Historical Bankruptcy Examples
Big Lots filing for bankruptcy draws comparisons to several examples in both the recent and distant past. Some businesses use chapter 11 bankruptcy and come back more successful than they ever were in the first place. Marvel is a perfect example here, turning its focus from comic books to movie production after bankruptcy and becoming a leader in the film industry. Some businesses operate at a slightly smaller scale than before bankruptcy, and others file for bankruptcy with the intention of shutting down with court protection from creditors. Corporate bankruptcy filings that are similar to Big Lots’ situation include:
- Red Lobster: Red Lobster’s bankruptcy is worth mentioning simply because it was probably the most talked-about bankruptcy case of 2024. Red Lobster was able to survive chapter 11 bankruptcy because it has a massive brand to rely on, regardless of its bankruptcy status, and it secured $60 million in new funding to ease its transition after discharging unmanageable liabilities. Red Lobster was forced to close dozens of locations across the country, but was able to preserve most of its 30,000 jobs.
- Bed Bath & Beyond: This retailer was similar to Big Lots in that its business model primarily relied on brick-and-mortar sales, but it didn’t portray itself as a discount retailer to the same degree as Big Lots. Instead, Bed Bath & Beyond would consistently mail coupons to bring down the price and make customers feel that they were getting a bargain. Bed Bath & Beyond filed its chapter 11 bankruptcy petition on April 23, 2023, but did go the route of liquidation and a series of going-out-of-business sales.
- Rite Aid: Rite Aid filed for chapter 11 bankruptcy in both 2023 and 2025. This pharmacy’s bankruptcy has an added layer of complexity because of how important it is to maintain its customers’ prescriptions. But all of its store locations have since closed, forcing customers to take their prescriptions elsewhere. Before the second bankruptcy filing, Rite Aid had 1,245 store locations in the United States.
- Tuesday Morning: Tuesday Morning is another brick-and-mortar retailer that offered a wide variety of goods at discount prices. Originally filed as a chapter 11 case, the company was forced to convert to chapter 7 liquidation as it could no longer afford its operating expenses. Attempts to find a buyer for the struggling brand had failed. Tuesday Morning closed hundreds of stores across the country and reached a $34.5 million settlement with its creditors.
Avoid Conversions, Dismissals & Other Bankruptcy Obstacles With Skilled Legal Counsel In Arizona
Many chapter 7 bankruptcy debtors look to cut down on legal costs by representing themselves rather than hiring a law firm to handle their cases. But petitions filed pro se are more prone to errors than those filed with guidance from an experienced Arizona bankruptcy attorney. Bankruptcy can become much more stressful and costly than you bargained for if significant issues arise throughout your case. But even in times of financial distress, our firm makes paying for quality legal representation easy with our Zero Down, Zero Interest payment plan options. File for bankruptcy- and receive its protections- now, and pay for it later. See if you’re eligible by scheduling your free consultation by phone. Call 602-649-4949 to get started today.
