%1

Specialty retailer Brookstone yesterday said that its president and chief executive, James Speltz, has resigned after taking the seller of travel gadgets and massage chairs through bankruptcy proceedings this summer, the Wall Street Journal reported yesterday. Steve Schwartz, a 15-year veteran of the company who is currently Brookstone's chief merchandising officer, will serve as interim president and CEO. Brookstone, which has about 240 stores in malls and airports, filed for bankruptcy protection in April. In court filings, the company said sales have lagged since 2007, and that it began searching for a buyer after a weak 2013 holiday season. Chinese investment firm Sailing Capital Overseas Investment Fund LP and Chinese conglomerate Sanpower Group won an auction in June to buy Brookstone for $174 million, trumping a $146.3 million offer from an affiliate of Spencer Spirit Holdings Inc., the parent company of Spencer's and Spirit Halloween retail chains.

RadioShack Corp. is considering a $585 million financing package led by hedge fund Standard General LP and investment bank UBS AG in an attempt to keep the struggling electronics retailer out of bankruptcy, the Wall Street Journal reported on Saturday. Under the plan, UBS will coordinate $325 million of commitments and Standard General will arrange $260 million to replace GE Capital's $585 million loan and credit facility. The new loans would loosen some restrictions in the terms of GE Capital's loan, giving the ailing retailer quicker access to cash through the holiday season. On Thursday, the company said that it could soon run out of cash and be forced to liquidate or seek bankruptcy protection if it can't find a way to improve its finances. RadioShack said its cash stockpile had dwindled to $30.5 million by Aug. 2, representing about $6,800 for each of its 4,485 stores. The company also had access to $152 million under its credit line from GE Capital. (Subscription required.)
http://online.wsj.com/articles/radioshack-considering-585-million-finan…

In related news, RadioShack Corp. said that John Feray resigned as chief financial officer last week, Reuters reported today. The company said today that it has named AlixPartners LLP managing director Holly Etlin as interim CFO. Advisory firm AlixPartners has been helping RadioShack with its turnaround since July 2013. Feray, who joined in January from Dollar General Corp , resigned on Sept. 12 citing personal reasons, RadioShack said in a statement. Etlin also served as RadioShack's interim CFO between July 2013 and February.
http://www.reuters.com/article/2014/09/15/radioshack-cfo-idUSL3N0RG3HB2…

For more information on a CRO’s responsibilities, be sure to pick up a copy of ABI’s The Chief Restructuring Officer's Guide to Bankruptcy: Views from Leading Insolvency Professionals. Purchase here: http://bookstore.abi.org/chief-restructuring-officers-guide-bankruptcy-…

Troubled electronics retailer RadioShack Corp. said that it may need to file for bankruptcy if its cash situation worsens, after reporting its tenth straight quarterly loss, Reuters reported today. The company is also exploring other options, including a sale or an investment, to overhaul its balance sheet, it said in a regulatory filing today. RadioShack, whose sales have been in a free-fall since 2010, said that it was working with its lenders and landlords to restructure its debt and cut costs. The company raised doubts about its ability to continue as a going concern and said it may have to liquidate as a last resort.

Franchisees of the 10 brands in the ranking defaulted at more than double the rate for SBA borrowers who invested in all other chains, according to a Wall Street Journal analysis of charge-offs of all SBA-backed franchise loans in the past decade. Put another way, franchisees of those 10 brands have left taxpayers on the hook for 21 percent of all franchise-loan charge-offs in the past decade, collectively failing to pay back $121 million in SBA-guaranteed loans from 2004 through 2013. The 7(a) loan-guarantee program is the SBA's most popular loan program by far. It was set up six decades ago to help borrowers who can't qualify for traditional loans obtain funding to start or expand franchises and other small businesses. The SBA guaranteed nearly $18 billion in 7(a) loans, including $2 billion for franchisees, in the fiscal year ended Sept. 30, 2013. Overall, 18 percent of all SBA 7(a) loans — and 13 percent of all such loans to franchisees — were charged off, according to data from 2004 through 2013. Quiznos franchisees charged off more money than any other brand during the 10-year period that the Journal reviewed. Its franchisees accumulated $38 million in unpaid loans and had a default rate of 30 percent from 2004 through 2013.

Associated Wholesalers Inc., a food distributor, filed for bankruptcy with a plan to sell its assets, citing “fierce competition” in the grocery supply business, Bloomberg News reported today. The company in chapter 11 papers filed in court yesterday listed as much as $100 million in debt and said that it planned to hold an auction with C&S Wholesale Grocers Inc. as the lead bidder. AWI listed some of the biggest U.S. brands as creditors, including Tyson, Kellogg, General Mills and ConAgra, each owed more than $2 million; and Smucker, Nestle, Kraft and Dannon, each owed more than $1 million. The company, whose White Rose unit also filed for bankruptcy, has been failing in part due to “compressed margins and fierce competition,” Chief Restructuring Officer Douglas Booth said in a court filing. In the planned sale, C&S will be the “stalking horse” or initial bidder in a court-supervised auction, subject to higher or better offers, AWI said. Booth said that AWI serves 800 supermarkets and other stores in the U.S. mid-Atlantic region, with about 1,400 employees.

Troubled electronics retail chain RadioShack is racing against the clock as it weighs its options, including a refinancing or a bankruptcy, TheStreet.com reported yesterday. It is burning through cash rapidly as it is unable to close money-losing locations. RadioShack planned to close up to 1,100 stores earlier this year, which was later blocked. Holding up the plan is Salus, which holds a $250 million second-lien loan. There is a covenant on that loan that requires RadioShack to get the lender's approval if it is to close more than 200 stores, but closing those stores would also mean a reduction in inventory. RadioShack hopes to get help from hedge fund Standard General, which might help with arranging financing that could not only buy RadioShack some extra time, but also give it flexibility in closing stores.

Sears Holdings announced yesterday that it had lost nearly a billion dollars in the first six months of the year, the New York Times reported today. The company has been bleeding money for several quarters as its leadership has tried to transform the business from a traditional retailer into a more targeted company that relies on loyal shoppers, who are offered personalized deals. Members of its free Shop Your Way rewards program accounted for 73 percent of quarterly sales, the company said on Thursday, and its online sales in the quarter grew 18 percent from the period a year earlier. Sears Holdings, which owns Sears and Kmart stores, lost $573 million in its second quarter and $975 million during the first half of the year. The company’s quarterly revenue declined to $8.01 billion from $8.87 billion in the period a year earlier.

A bid by television personality Marcus Lemonis and Dippin' Dots owner Fischer Enterprises to relaunch the closed Crumbs Bake Shop moved closer to reality this week after a deadline to trump the pair's $6.5 million offer came and went with no other takers emerging, Dow Jones Daily Bankruptcy Review reported today. The cupcake chain, which abruptly closed its doors in July and sought chapter 11 protection, will ask a judge to sign off on the bid at a Tuesday hearing in U.S. Bankruptcy Court in Newark, N.J.

With American Apparel and its newly restructured management facing intense investor scrutiny, the company’s earnings for the second quarter reinforced the retailer’s troubled financial footing, the New York Times reported today. Sales at American Apparel were essentially flat, at $162 million, in the period that ended June 30. And while losses narrowed considerably over the same period in 2013, the company still lost $16.2 million in the quarter, compared with $37.5 million a year earlier. The second quarter was the last reporting period largely under the leadership of the company’s founder, Dov Charney, who was dismissed by his handpicked board on June 18.

A bankruptcy judge yesterday authorized Love Culture Inc. to sell its remaining assets to investors who plan to keep open between 40 and 45 of the clothing retailer's stores, the Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Novalyn Winfield approved a deal to sell what remains of Love Culture following an earlier sale to United LC Capital LLC for $10.5 million plus several million dollars more to cover the costs of taking over its store leases.