Brookstone to remain going concern under bankruptcy deal with N.Y. firm
But Brady Sullivan purchase of Merrimack headquarters raises questions about future of employees
Specialty retailer Brookstone has agreed to sell its assets as a going concern, but its Merrimack headquarters is being sold separately to a commercial real estate firm, leaving up in the air the fate of the 90 workers employed there.
Under the deal, the company’s intellectual property and airport stores, as well as certain equity interests in joint ventures, will be sold to Bluestar Holding Company and Apex Digital Inc.
Manchester-based Brady Sullivan will buy Brookstone’s headquarters for $6.1 million, beating out neighbor BAE Systems. Both sales would have to be approved by the bankruptcy court after a hearing scheduled for Monday.
Brookstone, which filed for Chapter 11 bankruptcy protection on Aug. 2, started auctioning off its assets on Sept. 26, and continued the bidding though the weekend.
Previously, New York-based Bluestar was designated as the “stalking horse” to kick off the bidding at $56.3 million. Bluestar was mainly interested in the company’s name and intellectual property. It said it wanted to continue Brookstone as a going concern, keeping 30 or 50 stores open, but only agreed to a relatively small penalty if it passed on that option.
Bluestar submitted its joint bid with Apex Digital, an American electronics manufacturer based in California with extensive interests in China, according to a Sunday filing. The amount of the bids will probably be revealed in filings later on today.
Acquiring Brookstone’s intellectual property and equity interests would allow the new owners to continue to license its name and its products and its 10 percent ownership in some 550 Brookstone stores in China, primarily owned by Brookstone’s parent company and main supplier and largest creditor, Sanpower Group Co. Ltd.
But the future of the Merrimack headquarters and its employees is unclear.
Brookstone had already given notice to all 90 workers in Merrimack that they might all be laid off by November, but the company said that at the time the move was mainly a precautionary measure.
A company spokesperson could not be reached Monday morning.
Brookstone has already announced the closing of its 103 mall stores, including one at the Pheasant Lane Mall in Nashua, and its outlet in Conway, but it left 35 airport stores open.
The mall store closures ended Thursday, and the Brookstone – seeing no interest for anyone to take over the leases – proposed rejecting the leases in another motion filed Friday. Brookstone could simply lock up the stores and leave the mall owners with the keys, abandoning all “furniture, fixtures, equipment and unsold inventory” because it “will be difficult or prohibitively expensive to remove and/or expensive to store.”
In an objection filed Friday and withdrawn by Sunday, attorneys for BAE Systems – whose Merrimack facility down the road from Brookstone on Daniel Webster Highway – said that it first submitted a $4 million bid for the headquarters on Sept. 20. After several rounds, BAE had the highest bid at $5.1 million, over a $4.5 million bid by Brady Sullivan. A third bidder was Fairley White, another property management company.
But all of the bids fell short of the “reserve amount” of $6 million. BAE raised bid to $6 million if it was an uncontested purchase, but the auction resumed on Friday over BAE’s objection and the headquarters went to Brady Sullivan, at $6.1 million. BAE bidders didn’t have enough notice to respond in time, the filing said, thus losing the bidding war.
BAE did not explain why it withdrew its objection.