Wilmington, Delaware - Brookstone Inc, the retailer of luxury gadgets including US$4,600 (S$5,800) massage chairs, won bankruptcy court approval of a financing package to help fund operations and pay off some debt as it pursues a sale.
Brookstone filed for bankruptcy April 3 with a deal to sell its assets to Spencer Spirit Holdings Inc.
The chain has struggled to adapt to an evolving retail landscape where online competitors dominate and consumers are cutting back on non- essentials.
US bankruptcy Judge Kevin Carey last Friday granted the company interim approval to borrow about US$91.3 million of US$96.3 million in financing being provided by some of its noteholders.
The company will seek approval of the remaining US$5 million at an April 25 hearing.
Brookstone, based in Merrimack, New Hampshire, said the financing is crucial to its restructuring plans because it locks in the support of more than two-thirds of its noteholders for the proposed US$146.3 million sale to Spencer.
In addition to providing working capital, part of the financing would be used to pay off the senior secured credit facility and US$30 million of a second segment would be used to replace noteholder debt giving them a higher priority of repayment.
Brookstone started as a catalog business in 1965, offering "hard-to-find tools" before opening its first store in 1973 in Peterborough, New Hampshire, according to its website.
The company went private nine years ago in a US$422 million deal by a consortium led by OSIM International.
Singapore-based OSIM, Asia's biggest maker of massage chairs, sells its products through Brookstone stores.
Spencer, a novelty retailer, would pay US$120 million in cash and US$7.5 million in new notes and assume about US$18.5 million in liabilities.
The deal will be tested at a court-supervised bankruptcy auction to see if there are any better offers.
Brookstone listed debt and assets of as much as US$500 million each in Chapter 11 documents.