Retailer Boscov's files bankruptcy, may be sold

NEW YORK (Reuters) - Department store chain Boscov's Inc filed for Chapter 11 bankruptcy protection on Monday and put itself up for sale, becoming the latest retailer to succumb to a weak economy and tight credit.

The Reading, Pennsylvania-based company and seven affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It had $538 million of assets and $479 million of liabilities as of May 3, a court filing shows.

Founded in 1911, Boscov's describes itself as the largest family-owned, full-service U.S. department store chain, with 49 locations in Pennsylvania, Delaware, Maryland, New Jersey, New York and Virginia. It said it employs about 9,500 people and had sales of $1.25 billion in the year ended February 2.

Michael Hughes, a Boscov's executive vice president, said in a court filing the company plans to close 10 unprofitable stores and is exploring a possible sale to a third party.

He said Boscov's was hurt as the housing market collapse, skyrocketing energy and gas prices and higher food costs caused consumers to spend less on discretionary items. Hughes also said tighter credit market conditions have caused many vendors to tighten credit terms.

"The recent addition of these pressures and constraints to a broadline retailing industry that already operated on thin profit margins has forced the debtors into inadequate liquidity levels," he said.

Hughes said Boscov's has had productive talks with creditors and intends to emerge from bankruptcy as soon as the first quarter of 2009.

In a separate filing, Boscov's said it plans to arrange up to $250 million of financing to keep operating, with Bank of America NA as administrative agent. It said it also retained Lehman Brothers Inc to help it obtain new capital.

Boscov's joins more than a dozen retailers to go bankrupt in the last year, including Bombay Co, Goody's Family Clothing Inc, Linens 'n Things Inc, Mervyn's LLC, Sharper Image Corp, Shoe Pavilion Inc and Steve & Barry's LLC.

Source: Reuters

Sharper Image to close remaining 86 stores

Gadget retailer The Sharper Image plans to close all of its remaining stores, its new owners announced Sunday.

The company expects to sell $50 million in inventory as it shutters 86 stores across the United States, joint owners The Hilco Organization and Gordon Brothers Group said in a statement.

The group, which purchased the gadget retailer's assets in a bankruptcy auction Thursday for $49 million, said it has developed a licensing strategy for wholesale, retail, direct-to-retail, e-commerce, and catalog businesses.

The Sharper Image filed for Chapter 11 bankruptcy protection in February, with plans to shut about half of its 184 stores and reorganize. The San Francisco-based company said it had lost more than $135 million since early 2005. The company put itself up for sale in April.

Source: CNET

Investment firms win Sharper Image in bankruptcy

NEW YORK, May 29 (Reuters) - A joint venture led by units of private investment firms Hilco Consumer Capital Corp and Gordon Brothers Group have won a bankruptcy auction to acquire the assets of gadget retailer Sharper Image Corp SHRPQ.PK, a lawyer for Sharper Image said on Thursday.

The firms will pay $49 million plus some contingent recovery for assets of the gadget retailer, according to Harvey Miller, an attorney with Weil, Gotshal & Manges, LLP, who is representing the company.

Source: Reuters

Sharper Image, Linens 'n Things face auctions

NEW YORK, May 27 (Reuters) - Facing the tightest credit markets in years, bankrupt companies are finding it easier to sell off assets to the highest bidder or liquidate, rather than spend years crafting a restructuring plan.

The incentives to liquidate or sell assets have grown in the last few years due to tougher bankruptcy laws and tight credit markets, restructuring experts say. It will be highlighted this week as two bankrupt retailers, Sharper Image Corp SHRPQ.PK and Linens 'n Things, face auctions for all or parts of their assets.

"Sales in Chapter 11 have become more commonplace than they were certainly 20 years ago," said Mark Shapiro, managing director and head of Lehman Brothers Holding Inc's (LEH.N: Quote, Profile, Research) restructuring finance group. "To do a reorganization you need enough capital to survive for a long time."

Sharper Image, which filed for bankruptcy protection in February, will hold an auction on Wednesday for its assets, including its trade name and intellectual property.

The gadget retailer concluded last month that the best route to exit bankruptcy would be to sell itself, despite already closing 96 of its 187 stores in the hope a leaner version of the retailer could have stayed afloat.

The company had hoped a new catalog would boost sales enough to propel it through reorganization, but when that failed to materialize and credit markets did not improve, it began looking for buyers, its attorney, Harvey Miller, told a Delaware bankruptcy judge earlier this month.

A joint venture between private investment firms Hilco and Gordon Brothers, which had already partnered to liquidate the 96 Sharper Image stores, offered a bid for the company of $51.25 million, plus other considerations. That bid was approved as the "stalking horse," meaning the joint venture will make the first bid for the company on Wednesday.

But the auction could be competitive as Sharper Image has also received a bid from a group called JWLSP Acquisition, which includes the retailer's former chairman Jerry Levin.

The retailer joins a slew of other companies that have ended up selling assets or announced plans to sell assets over the last few months, including online gift catalog site RedEnvelope Inc REDEQ.PK, Hawaiian air carrier Aloha Airlines and all-business class airline Eos Airlines.

"The idea is if you sell the businesses quickly, then you can do a liquidating plan and that doesn't take very long to do," said Barbra Parlin, a bankruptcy attorney at Holland & Knight in New York. "But if you try to operate the business and pare it down and reorganize it in the true sense, it might take longer."

A buyer has the opportunity to reorganize a business, but it gains the ability to reorganize outside of court where its actions are not under a microscope.

Other companies have tried to liquidate weaker portions of their businesses in an effort to raise cash.

Linens 'n Things is heading down a similar path as Sharper Image, by auctioning off liquidating rights to 120 of its "underperforming" stores on Thursday, but for now, the retailer still plans to emerge from bankruptcy protection as a going concern with its remaining 589 stores.

Companies such as retailers and airlines face particular challenges, bankruptcy experts say, because it is hard to forecast when consumers will begin shopping again, or whether oil prices will ever return to more airline-friendly levels.

"There's a lot more pressure today," said David Heiman, a bankruptcy lawyer at Jones Day in Cleveland.

"You may have creditors who don't want to wait forever and say you better try and sell this company, rather than wait three to four years for it to reorganize."

Due to changes in the bankruptcy law, companies also find they are now running against a clock when they file for bankruptcy protection, Parlin said. The 2005 reforms to the bankruptcy code gave companies new time limits, including essentially an 18 month window to come up with their reorganization plan, Parlin said.

"As a result of the way the law changed, people who go into bankruptcy are concerned they're not going to have enough time to really reorganize," Parlin added. "People are almost feeling like they have to sell."

Source: Reuters

Sharper Image Wins Approval to Hold Auction on Sale of Chain

May 15 (Bloomberg) -- Sharper Image Corp., after dropping a plan to close half of its stores and reorganize, won bankruptcy court permission to sell all of its assets at a May 28 auction.

U.S. Bankruptcy Court Judge Kevin Gross approved the auction yesterday at a hearing in Wilmington, Delaware. Gross also authorized the home-gadget seller to pay a 2 percent break-up fee if a rival buys assets sought by a joint venture that includes liquidator Hilco Merchant Resources LLC and Gordon Brothers Merchant Partners.

"The operations of the on-going stores have been disappointingly below projections,'' the company said in court papers. Since filing for bankruptcy on Feb. 20, Sharper Image hasn't had enough cash to replenish its stores with new products.

Source: Bloomberg.com

The 31-year-old retailer, which sells household gadgets from air purifiers to car-navigation systems, filed for bankruptcy saying it planned to close about half of its 184 stores while reorganizing. Before the filing, Sharper Image, based in San Francisco, had lost money in 11 of the last 13 quarters.

Because of its continuing problems, the company must sell itself while the Sharper Image brand still has value, the company said in court papers.

Sharper Image has said it lost more than $135 million since early 2005, partly because of lawsuits over Ionic Breeze air purifiers and tightening credit markets. In court documents, the company listed assets of $251.5 million and debt of $199 million as of Jan. 31.

The case is In re Sharper Image Corp., 08-10322, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Source: Bloomberg.com

Sharper Image to sell itself

Sharper Image Corp. put itself up for sale today, just over two months after filing for Chapter 11 bankruptcy protection.

The retailer of high-end gadgets and appliances said a sale was the best route, in light of the weak U.S. economy and credit crunch.

"Given the present retail climate and specialty nature of the company, as well as the limited financing available to the company, a sale of its business and assets at this time will preserve values and yield the best recovery to the company," said Robert Conway, Sharper Image's chief executive.

The company said it wants to complete the sale by the end of May and will prepare for an auction of its business as soon as possible.

Earlier this month, Jerry Levin, the chairman of Sharper Image's board, resigned and said he was interested in partnering with other investors to buy some or all of the company.

At that time, Conway said the San Francisco-based chain would fully consider any proposal.

Sharper Image struggled through three years of losses and litigation involving its Ionic Breeze air purifiers. Its shares closed Wednesday at 23 cents.