First bidder emerges in Brookstone bankruptcy

Reviver of troubled brands offers $35 million for remainder of retailer

Authentic Brands Group has opened the bankruptcy bidding for Brookstone at $35 million, but the New Hampshire-based retail chain says more and higher bids may come.

Authentic Brands, a privately owned firm that has acquired a number of other troubled companies and brands, including Aeropostale, Frye and Nautica, signed the offer on Friday. Brookstone announced it Monday.

The opening bid – officially known as a “stalking horse” bid – would fall far short of covering the company’s secured debt, which totals $82 million, though nearly half of that debt is owed to Sanpower, the company’s Chinese parent company and main supplier and could be challenged in bankruptcy court, said the committee of unsecured creditors. Brookstone estimates that it has more than $120 million in unsecured claims, with $46.6 million of that trade debt owed to Sanpower.

The money from the sale of assets could be used to pay off a proposed $30 million post-bankruptcy loan from two of the company’s pre-petition secured creditors: Wells Fargo and Gordon Brothers Financing. Unsecured creditors charged that the loan was designed to take care of these lenders at the expense of everyone else. 

The sale would not include Brookstone’s 102 mall stores, including one in Nashua and an outlet in store in Conway, which are in the midst of going-out-of-business sales. But the estate could get the proceeds of that sale, which started days following Brookstone’s Aug. 2 Chapter 11 bankruptcy filing.

The sale of the rest of the company to Authentic Brands would include 37 airport stores (which would remain open) an online sales operation and Brookstone’s intellectual property.

Authentic has some experience in turning brands around. Since it acquired Aeropostale with mall owner Simon Property Group and General Growth Properties, Aeropostale reopened over 500 stores under new management.

On its website, Authentic says its brands have 4,600 stores in total and $7.6 billion in annual sales.

It’s not clear, however, whether Authentic brands would be managing Brookstone, even its bid is successful.

“The proposal includes an expressed interest in identifying a partner to maintain and maximize Brookstone’s iconic retail business,” said the press release announcing the stalking horse bid.

The bid will be the subject of a long hearing on Wednesday in Delaware bankruptcy court. If other bids come forward, the company would proceed to a bankruptcy auction, set for Sept. 24, giving creditors four days to object. The sale would close on Sept. 30, pending approval by the bankruptcy court the very next day, Oct. 1.