Brookstone bankruptcy plan goes to court on Wednesday

Unsecured creditors in line to get some 20% of what they’re owned

The bankrupt shell of specialty retailer Brookstone Inc. will be liquidated, giving unsecured creditors about a fifth of what they are owed, according to a proposal that goes before the federal bankruptcy court in Delaware for the first time on Wednesday.

According to the proposal, secured creditors will get paid off in full – thanks to a sale of most of the retail chain’s assets, including its Merrimack headquarters, in October. Sanpower, Brookstone’s former Chinese owner, will come up empty-handed, though it will be able to continue to sell Brookstone products in some 550 stores in which it has an interest in China, as well as to continue to make money off of Brookstone as a supplier.

Brookstone’s mall stores were closed and abandoned last September, but the airport stores continue to operate under a new owner, Bluestar Alliance LLC, a brand marketing firm in New York, and Apex Digital Inc., a consumer electronics company in California.

According to the proposal, unsecured creditors will receive between 16.4 and 22.5 percent of what they are owed – during bankruptcy proceedings, that was estimated at $75 million to $85 million.

There have apparently been other settlements and write-offs. The estimated unsecured creditor pool is now down to nearly $44 million.

As of Nov. 24, the bankrupt estate had $59.6 million in assets, $21.4 million in cash, according to a recent monthly operating statement. But the liquidation analysis estimates that the assets after liquidation to be somewhere between $16.9 million and $19.6 million. That will leave somewhere between $7.2 million and $9.9 million to distribute after expenses, primarily fees charged by lawyers and other professionals.

The Official Committee of Unsecured Creditors has signed on to the plan, giving it a good shot of being approved. Parties have until March 11 until final objections, and the bankruptcy plan itself would be confirmed after a hearing scheduled for March 20.

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