Bed Bath & Beyond Inc. is speaking with potential lenders that would finance the company during bankruptcy proceedings, according to people with knowledge of the matter.

The talks include the potential for a so-called stalking horse bid, in which the party would also offer to buy some or all of the company’s assets in bankruptcy and set the low-end of the bidding bar so that others can’t offer less, said the people, who asked not to be identified discussing private negotiations. Talks are in the early stages and terms could change, the people said.

A spokeswoman for Bed Bath & Beyond reiterated a previous statement that the company is exploring “multiple paths” to improve the company’s outlook and is “determining our next steps thoroughly, and in a timely manner.”

Union, New Jersey-based Bed Bath & Beyond has seen losses widen as it tries to pursue a turnaround of its business. In an earnings release Jan. 9, it said its net loss widened to US$393 million in the three months ended Nov. 26 and said it was considering “all strategic alternatives” to get back on financial track.

Last week, the retailer said those options included the possibility of bankruptcy, a warning that came after it withdrew a bond-swap offering. 

Bed Bath & Beyond has been getting advice from law firm Kirkland & Ellis and investment bank Lazard Ltd.  Representatives for Lazard and Kirkland & Ellis did not immediately comment.

Bed Bath & Beyond’s suppliers have become increasingly cautious in recent months, worried about getting paid for the products they are selling to the home-goods store chain. Some suppliers have stopped shipping merchandise altogether, while those that continue to work with the company have demanded increasingly stringent payment terms to ensure timely payment. 

Those efforts have left Bed Bath & Beyond with significantly fewer products on shelves than it would normally have, forcing some shoppers to leave empty handed, exacerbating the company’s downward spiral. The retailer, though, says it has been making progress in recent weeks restocking inventory. But it might be too little, too late.