Brookstone amends Chapter 11 plan to incorporate global settlement

By Caroline Salls

Pittsburgh, May 8 - Brookstone, Inc. filed an amended plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Brookstone entered into a $147 million plan sponsorship and stock purchase agreement with an affiliate of Spencer Spirit Holdings.

Specifically, the Spencer affiliate agreed to sponsor a Chapter 11 plan supported by Brookstone's pre-bankruptcy noteholders by acquiring 100% of the newly issued shares of stock of reorganized Brookstone Holdings Corp. for $120 million in cash, $7.5 million in notes and assumption of liabilities, with the total consideration valued at up to $146.27 million.

To ensure that the maximum value for the shares is achieved, the right to act as plan sponsor will be market tested through a competitive auction process to be approved by the court.

According to the amended disclosure statement, the company's official committee of unsecured creditors also supports the stock purchase agreement and plan in light of a global settlement reached on April 25.

As a result of the global settlement, holders of general unsecured claims will be entitled to greater recoveries than they otherwise would have in the absence of the settlement.

In light of the global settlement, Brookstone said the representatives of all of its creditor constituencies support the plan.

Creditor treatment

Treatment of creditors will include the following:

• Holders of "other" secured claims will either be paid in full in cash or receive the collateral securing the claims;

• Holders of priority claims will be paid in full;

• If the Spencer affiliate submits the winning bid, noteholders will receive cash and escrow amounts from various sources, as well as reorganized holding company notes. If the winning bid is modified to increase the consideration payable or the winning bidder is not Spencer, noteholders will receive other treatment set in the stock purchase agreement;

• Holders of general unsecured claims will receive a share of a general unsecured claim fund. Also, under the amended plan, these creditors will receive a share of an excess amount and additional distribution, subject to specified conditions, if the winning bid is amended to increase the consideration payable or the winning bidder is not Spencer;

• Intercompany interests will be reinstated and rendered unimpaired; and

• Holders of section 510(b) claims and holding company interests will receive no distribution.

The disclosure statement hearing is scheduled for May 19.

Brookstone, a Merrimack, N.H.-based specialty retailer, filed bankruptcy on April 3. The Chapter 11 case number is 14-10752.

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