When you think of Brookstone, you might think of the fun store where you could potentially fly a model helicopter while reclining in a leather chair. The company, based out of New Hampshire, is known for providing interesting products, many of which can be tried out in its stores. However, the retailer has recently struggled to turn enough profit to stay afloat. Now, Brookstone has filed for Chapter 11 bankruptcy protection in order to resolve some of its debts.
In recent years Brookstone has had to lay off workers and close stores because many consumers have cut back on leisure spending due to the recession. Brookstone plans to sell itself to the owner of Spencer’s retail stores for about $147 million in order to stimulate sales and build a new path that they hope will lead to success for Brookstone. This sale may enable Brookstone to maintain their brick-and-mortar stores in malls and airports, as well as reinvigorate online and catalogue sales.
Brookstone’s bankruptcy filing states that the company has over 5,000 creditors and liabilities as high as $500 million. Brookstone needs time to reorganize and reconsider its debts and attempt to finalize its sale to the Spencer’s chain, making Chapter 11 a viable option to aid in the company’s survival. If the filing is successful, then Brookstone’s Chapter 11 filing could enable them to get back on track.
While Chapter 11 can be time-consuming and expensive, the efforts can be worth it if – especially in cases like this when a business owner has a serious, motivated buyer in the wings. Chapter 11 can offer an opportunity to rearrange the payment of debts and balance expenditures and earnings while keeping the business in operation. Business owners who want to learn more about bankruptcy protection may benefit from legal counsel.
Source: The Columbus Dispatch, “Brookstone files for Chapter 11,” William Alden, April 4, 2014
