Cooley’s Corporate Restructuring & Bankruptcy Group was selected by the official committee of Brookstone’s unsecured creditors as its lead counsel in Brookstone’s chapter 11 proceedings, which began on April 3, 2014. Brookstone, the specialty retailer best known for its massage chairs and travel electronics, filed for chapter 11 protection in Wilmington, Delaware with a plan to sell its business to the owner of Spencer’s, another national specialty retailer, for $147 million. Spencer’s will serve as the stalking horse plan sponsor in a process supported by a majority of Brookstone’s lenders. The Spencer’s offer would be sufficient to pay out Brookstone’s first-lien debt and a portion of its second-lien debt, leaving a substantial deficiency claim that would swamp trade creditors in the general unsecured claims pool. As it entered bankruptcy protection, Brookstone had approximately 240 store locations in malls and airports across the U.S., and the Spencer’s transaction would see most of those locations remain open for business.
In connection with the proposed sale and restructuring process, Brookstone has requested approval for a postpetition financing package that would pay out its first-lien lenders and “roll-up” $30 million of Brookstone’s $137.3 million in second-lien debt.