Joel R. Glucksman
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The consumer electronic gadgets retailer Brookstone, Inc. may be preparing to file for bankruptcy protection under Chapter 11 of the bankruptcy law, according to Bloomberg. The retailer is in talks with Spencer Spirit Holdings, which may acquire it as part of the deal. According to a March 27 statement, the two retailers are in talks to negotiate an agreement.
Brookstone operates 240 locations nationwide in malls and airports, which will continue to operate under the same name and with the same employees, according to the news source. The Merrimack, N.H., based retailer has been struggling with online competition and the slow retail sales that have affected a number of major U.S. retailers. In 2008, one of Brookstone’s major competitors, Sharper Image, went under as a result of similar challenges.
Spencer operates 644 locations, and sells costumes, gag gifts, novelty t-shirts and other goods targeted at young adults. For Spencer, the merger might bring new growth opportunities, Bloomberg explained.
“While we have implemented various successful cost-cutting initiatives, the search for a strong strategic partner who shares our vision and passion was a natural progression,” Brookstone Chief Executive Officer Jim Speltz said in the statement, reported the news source. “We think we have found that in Spencer Spirit and are excited about the opportunity to begin leveraging the resources of the two companies.”
According to The Wall Street Journal, Brookstone began evaluating bidders after missing a January payment to its creditors. Spencer Spirit Holdings is expected to pay an estimated $120 million for the company, which holds an estimated $140 million in liabilities. On Sept. 28, 2013, Brookstone had only $1.1 million in assets, down from $31.6 million one year earlier.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
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