Brookstone bankruptcy auction to be held Wednesday
Fate of New Hampshire-based retailer as a going concern remains in doubt
The assets of the bankrupt Brookstone retail chain will be auctioned off in a law office on Wednesday in Delaware.
Whether the high-end gadget retailer continues as a going concern, and keeps on about 90 employees at its Merrimack headquarters, is another question. Those employees have already been warned they may not have a job in November. There is also the question of whether there will be enough money for the self-insured company to pay healthcare claims.
The bankruptcy trustee on Monday objected to the sale because of concerns it may not raise enough money for Brookstone to be administratively solvent, thus jeopardizing claims. Cigna, which administers Brookstone’s self-insured plan, also filed an objection, saying that bankruptcy filings up to now hadn’t set aside any money for such claims.
The bankruptcy court is expected to look at such objections on Oct. 1, when it could also decide whether to approve any agreement reached with the winner of today’s auction.
Brookstone filed for bankruptcy on August 2, closing all of its mall stores, including the one Pheasant Lane Mall in Nashua and its outlet in Conway. For now, though, its airport stores will remain open.
There is least one bidder, Bluestar Holdings Company, which agreed to be the “stalking horse” with a $56.4 million starting bid ($5.9 million in merchandise) but in the end the bid may wind up being only for Brookstone’s intellectual property. Bluestar, however, did express a willingness to buy Brookstone as a going concern, keeping 30 to 50 store open – almost all the airport stores and perhaps some mall stores.
The intellectual property would allow Brookstone to continue licensing deals for some 550 stores in China, which are primarily owned by Sanpower Group Co. Ltd., Brookstone’s parent company and its largest creditor.
Thus far, no one has raised any objections to Sanpower’s bankruptcy claims, though the unsecured creditors committee hinted it might pursue litigation against the China-based company.
Aside from the trustee and Cigna filings, most of the objections were filed from shopping mall owners disputing the amount of rent owed during Brookstone’s closeout sale, including a filing by Simon Properties, owner of the Pheasant Lane Mall. Simon contends that Brookstone should pay losses resulting from the bankruptcy filing and attorneys’ fees. In the case of the Pheasant Lane mall, Simon claims Brookstone owes $33,883.
Google and Oracle also filed objections over how much they should be paid while they continue to provide services.