Buy Buy Baby auction is canceled, but buyers are still interested in making a bid

Bed Bath & Beyond canceled a Friday auction for its Buy Buy Baby chain because it failed to secure a buyer willing to keep its stores running – but it’s not quite over for the baby retailer just yet, CNBC has learned.

Bidders backed out of the auction after they determined the chain was no longer worth buying because its value had deteriorated so much, but there are parties still interested in its assets, according to two people close to the matter who weren’t authorized to discuss it publicly.

While it would be unusual, Bed Bath & Beyond could still accept a bid for Buy Buy Baby early next week. The chain’s fate won’t be definitively determined until Tuesday, when a court hearing is scheduled to approve the sale of Buy Buy Baby’s intellectual property to Dream on Me Industries. The company, a little known New Jersey-based retailer and one of Buy Buy Baby’s former suppliers, agreed to buy its trademark and digital assets for $15.5 million if no higher bids arise.

Once considered the crown jewel of Bed Bath & Beyond’s now-failed empire, the baby chain has been in the midst of liquidation sales at its 120 stores since its parent company filed for bankruptcy protection April 23. 

As the auction process dragged on and Buy Buy Baby’s inventory dwindled, so did its value. Nearly three months into close out sales, there’s little left to bid on besides the brand’s intellectual property, one of the people said.

“Most of the value was in the IP,  especially at this point in the process. One can imagine that three months ago, when they were fully functioning stores operating and running, that might not be the case,” said the person.

For the past several weeks, Bed Bath & Beyond has repeatedly pushed back and split up the bankruptcy-run auction process for Buy Buy Baby so it could secure higher bids and find a firm that was…