In today's economy, many retail establishments that were extremely successful in the past have experienced a downturn. The current economic condition has forced many companies in Texas and other parts of the United States to look for debt relief by submitting a bankruptcy filing according to the guidelines of Chapter 11 of the U.S. Bankruptcy Code. Brookstone, a well-known retail chain whose stores are a common sight in shopping malls around Texas, announced it filed for bankruptcy under Chapter 11 as part of its $147 million sale to Spencer Spirit Holdings.
Although Brookstone is facing a tough time financially, it has promised to keep 240 stores open so that business can continue as usual. One of the distinct advantages of filing Chapter 11 bankruptcy is that it allows businesses to continue operating unhindered.
Brookstone, once a favorite retail outlet among shoppers for its large selection of popular and unusual gadgets, faced a tough time during the recession. Its fortunes failed to turn around, especially because of the competition faced from online retailers. Sales figures steadily declined over the years and in the last quarter, Brookstone saw a sharp 7 percent dip.
According to its filing, Brookstone has between $100 million and $500 million in liabilities. Filing bankruptcy under Chapter 11 will help Brookstone to defer payments against some of these debts. The reorganization process may also allow a lower interest rate on secured debts.
The company announced that it would be taken over by Spencer Holdings. Under Chapter 11 bankruptcy protection, the court may allow Spencer to buy the assets, free of liens and interests.
A business owner looking for debt relief may consider consulting an attorney to understand and navigate the various complexities of filing a Chapter 11 bankruptcy. It might help a floundering business make an intelligent decision regarding the future.
Source: ABC News, Mall Staple Brookstone Seeks Bankruptcy Cover, April 3, 2014