Estimating liabilities as high as $500 million, gadget purveyor and mall store staple Brookstone has filed for Chapter 11 bankruptcy protection. The move comes as part of a planned sale to Spencer’s Spirit Holdings for $147 million, a purchase price that includes $120 million in cash. With up to 5,000 creditors, Brookstone said it had just $1 million in cash on hand, as of its most recent reporting last September.
“The retail industry continues to evolve and staying ahead of the curve is critical,” James M. Speltz, president and CEO of Brookstone, said in a statement. “A partnership with Spencer Spirit provides us the canvas upon which to sketch our next chapter.”
Brookstone said its 242 mall and airport stores will remain open through the bankruptcy process, and its wholesale business, along with its catalog and website, will continue under the Brookstone name. Top 40 supplier Gemline (asi/56070) is the exclusive vendor of Brookstone products in the ad specialty industry, offering Bluetooth speakers, wine chillers, power banks and other items.
Jonathan Issacson, Gemline’s president, told Counselor that his company will continue to provide Brookstone items going forward. “Brookstone is a strong brand and we really enjoy our relationship with the company,” Issacson said. “They’re great people and they’ve kept in close communication with us. From Gemline’s perspective, it’s business as usual. We expect Brookstone will come out of this well-positioned for the future.”
Spencer’s Spirit Holdings owns Spencer’s, which sells gag gifts, and Spirit, which sells Halloween costumes. Brookstone’s previous owners, which include two Singapore-based entities and a private equity firm, had purchased the company in 2005 for $422 million.