Hudson Bay Capital Management has secured the dismissal of a lawsuit brought by the former Bed Bath & Beyond Inc (Bed Bath), which alleged the multi-strategy hedge fund firm improperly profited from the retailer’s decline, according to a report by Bloomberg.
Filed in May 2024, the suit sought to recover more than $300m in trading gains, claiming Hudson Bay breached rules requiring investors and executives with stakes above 10% to forfeit short-term profits. The dispute focused on a 2023 derivative offering that helped the cash-strapped retailer raise capital. Bed Bath alleged the fund influenced the terms to acquire shares at steep discounts and sell them quickly for profit.
In Tuesday’s decision, US District Judge Mary Kay Vyskocil ruled that Bed Bath had not plausibly shown Hudson Bay beneficially owned more than 10% of the retailer’s common stock. The judge concluded the claims related to derivative conversions and sales within six months were legally insufficient.
Hudson Bay, represented by Akin Gump Strauss Hauer & Feld, said it never held more than 10% of Bed Bath’s shares.
Bed Bath & Beyond, once a 1,500-store retailer generating roughly $12bn in annual revenue, filed for Chapter 11 bankruptcy in April 2023 after multiple failed turnaround efforts. The Bed Bath & Beyond trademark was subsequently acquired by a separate company now operating as Beyond.
