Gadget Specialty Company Brookstone Prepares for Bankruptcy

Citing declining sales, weak liquidity and high levels of debt, the once popular shopping mall gadget retailer, Brookstone, is preparing to file for bankruptcy protection. However, it appears that another specialty company, Spencer Spirit Holdings Inc., may be ready to swoop in and purchase Brookstone.

After missing a payment to its creditors in January, Brookstone began searching for potential buyers. Spencer Spirit Holdings Inc., has been in discussions with Brookstone for the past few weeks hoping to finalize a deal.

According to the Wall Street Journal, Brookstone is approximately $140 million in debt and is expected to sell for $120 million. Spencer Spirit Holdings Inc. has said that it does not plan on closing any Brookstone stores, or reducing the amount of employees. Spencer’s is a retailer specializing in “fun and novel products,” geared toward 18 to 24 year-old young adults. Spirit is a costume retailer.

Brookstone got its start in 1965, selling “hard to find tools” as a catalog retailer.  In 2005, investment firms J.W. Childs Associates LP, Osim International Ltd. and Temasek Holdings Pte executed a $440 million deal to make Brookstone a privately owned company. According to the Wall Street Journal, the deal saddled the company with additional debt, and the company failed to meet sales expectations due, in part, to the recent recession.

In addition, growing competition from the Internet hurt the sales of the gadget company. According to its most recent earnings filing, Brookstone had $1.1 million in cash, down from $31.6 million the year before.

Brookstone is just the most recent company to file for or to consider filing for bankruptcy in what seems to be a revolving door of filings in recent months. Loehmann’s Holdings Inc. filed for Chapter 11 protection in December, Dots LLC filed in January and Ashley-Stewart filed two months later.

Joel R. Spivack, Esq. has been fighting for the rights of New Jersey and Pennsylvania residents and business owners in bankruptcy protection filings for nearly 30 years. Contact the Law Office of Joel R. Spivack today for a free consultation. Call 856-488-1200.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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