Few nationally-known chains have attracted lovers of sleek gadgets like Brookstone. From massage chairs to modern electronic devices, shoppers at malls could always find reasons to fritter away idle moments perusing and, in some cases, using their merchandise in its stores.
Unfortunately for Brookstone, Inc. downward sales figures necessitated it file Chapter 11 bankruptcy. Earlier this month a federal bankruptcy court in Delaware approved a financing plan which will allow the company to fund its continuing operations while it seeks to finalize a deal with a prospective buyer. When it filed the bankruptcy action on April 3, it also announced that the company is involved in negotiations with Spencer Spirit Holdings Inc., a company which owns many stores which, like Brookstone, has maintained a significant presence in shopping malls for literally decades.
U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, granted the company interim approval to borrow about $91.3 million of $96.3 million in financing being provided by some of its note holders. The company will seek approval of the remaining $5 million at an April 25 hearing. Under federal bankruptcy law, debtors can obtain financing to be used to maintain the debtor company’s operations during the pendency of the bankruptcy case. Lenders who provide this particular financing, known as “debtor-in-possession, or “DIP” financing, to the debtor intend to prevent the debtor’s assets from significantly diminishing while it seeks to gain discharge of its liabilities. Because of the role in maintaining the company’s operating viability during this period, these lenders can expect to receive much more reasonable return on their investment than the creditors pursuing their claims for debts already incurred.
The goal in this instance is to keep Brookstone running until Spencer Spirit Holdings actually purchases the company. The proposed sale is estimated to be valued at $146.3 million. The financing provided by these note holders should serve as a bridge which will enable the two retail companies to finalize their deal.
In Albuquerque, Giddens & Gatton Law, PC has attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, PC at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.