(Bloomberg) -- Big Lots Inc.’s efforts to stay in business are beginning to unravel, putting the discount retailer that employs more than 27,000 people at risk of liquidation, according to court records and people with knowledge of the matter.

A valuation appraisal of the bankrupt company’s inventory came in lower than expected, which threatens the economics of the sale of the chain to private equity firm Nexus Capital Management LP, said the people, who asked not to be identified discussing a private matter. At the same time, landlords have demanded that Big Lots explain why it hasn’t closed the deal with Nexus, which agreed to buy the company after it filed for Chapter 11 in September. 

An official committee of unsecured creditors on Monday demanded that the company either pay tens of millions of dollars in back rent, or be liquidated by a court-approved trustee. US Bankruptcy Judge J. Kate Stickles is scheduled to hear a status report on that dispute and the Nexus sale during a court hearing Thursday. The company has asked the judge to delay consideration of a related series of landlord complaints involving the Nexus deal, according to court documents. 

A representative for Guggenheim Partners, which is advising the company, declined to comment. Representatives from Big Lots, Nexus, as well as Kirkland & Ellis, which is advising Nexus, and the company’s legal counsel Davis Polk & Wardwell, did not return messages seeking comment. 

Columbus, Ohio-based Big Lots has suffered from declining sales for years, including in recent quarters, as rising inflation squeezed the wallets of its budget-conscious shoppers. Other retailers, including Conn’s Inc. and LL Flooring Holdings Inc., have come under strain amid a slowdown in home spending. 

Party City Holdco Inc. is planning to file for bankruptcy possibly within the next two weeks, in a process that may lead to the liquidation of its stores, Bloomberg reported. Container Store Group Inc. is also preparing to file for bankruptcy in the coming weeks following mounting losses and escalating liquidity woes, Bloomberg also reported earlier this month.

Last month, Stickles approved the sale, but with the understanding that certain conditions had to be met before the deal could close. Those conditions included that the buyer receive a debt commitment letter related to the deal’s financing and that Big Lots certify the value of certain assets it is contributing to the deal, according to the purchase agreement. 

The company and Nexus have until Dec. 31 to close the deal, or the sale can be terminated.

Nexus obtained $765 million in committed financing to support its proposed acquisition as part of a plan to turn around the business and preserve thousands of jobs after paying off a substantial portion of the company’s debt. 

Following its bankruptcy filing, Big Lots said it had about 9,600 full-time employees and about 18,100 part-time employees and that it had closed dozens of stores and cut costs in order to save money. It has about $556 million in long-term debt, according to court documents.

The case is Big Lots Inc., number 24-11967, in the US Bankruptcy Court for the District of Delaware.

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