Brookstone files for Chapter 11 protection
October 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING
Financier Worldwide Magazine
October 2018 Issue
In what is its second bankruptcy action in recent years, mall and airport specialty retailer Brookstone Company, Inc. has again filed for protection under Chapter 11 of the US Bankruptcy Code and is seeking a buyer for its airport locations, wholesale and e-commerce operations.
Continued lagging sales have been cited by Brookstone as the reason for the filing, just four years after its previous bankruptcy sale.
Approximately $215m in debt, the beleaguered retailer has filed customary first-day motions with the bankruptcy court for the District of Delaware to ensure that all its operations continue without interruption. Its airport stores will operate on normal hours, employees will be paid and customer programmes, including the use of gift cards and reward programme points, will continue pending court approval.
Furthermore, through an agreement with Wells Fargo Bank, NA, and Gordon Brothers Finance Company, Brookstone has secured access to approximately $30m in post-petition financing to support operations during the bankruptcy, sale and restructuring process. The company has also confirmed that it will pay vendors on a priority basis for goods and services ordered and received.
Well known for massage chairs, quirky gadgets and travel luggage, Brookstone has begun a process to close the company’s 101 mall store locations, following continued deterioration of traditional retail mall business. Despite the Chapter 11 filing, the retailer’s airport stores and website will remain open.
Brookstone’s difficulties add to a growing list of mall chains that have struggled in the face of online shopping. Over the past year, Nine West, Claire’s and Gymboree have also filed for bankruptcy, while Toys R Us has liquidated its entire intellectual assets, including domain names.
“We have taken important steps to restructure the business and ensure that Brookstone will be well-positioned to succeed for years to come,” said Piau Phang Foo, chief executive of Brookstone. “The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint.”
Brookstone has also stated that it will continue to provide customers with the same product quality and variety for which the company is known through its 35 stores in airports across the US and its successful e-commerce and wholesale businesses. “Our airport, e-commerce and wholesale business divisions are operating successfully and should prove attractive to a buyer with the financial resources and vision to carry our company into the future,” said Mr Foo.
Founded in 1965, Brookstone is a US-based product developer and retailer of wellness, entertainment and travel products. Brookstone products are available at its 35 retail locations in airports throughout the US, online and through select premium retailers worldwide. The retailer is owned by Chinese conglomerate Sanpower Group Co. Ltd, which acquired Brookstone for $136m in 2014 following its bankruptcy filing.
Brookstone’s legal advisers in connection with the bankruptcy and restructuring are Gibson, Dunn & Crutcher, LLP and Young Conaway Stargatt & Taylor. Its financial adviser is Berkeley Research Group, LLC (BRG). GLC Advisors & Co., LLC is serving as Brookstone’s investment banker.
Mr Foo concluded: “We thank all our mall store employees and managers who have contributed so much despite an extremely challenging retail environment at malls, and our thousands of loyal customers whom we look forward to continuing to serve.”
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