Road funding

Appreciate Technology Files for Bankruptcy with Plans to Sell

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Diving Brief:

  • Enjoy Technology filed for Chapter 11 bankruptcy protection in federal court in Delaware on Thursday, according to a securities deposit.
  • The “home-based business” company said it intended to continue operating through the process and planned to sell itself in bankruptcy to the highest bidder. It has also decided to end its operations in the United Kingdom.
  • To finance it throughout the process, Enjoy has a bankruptcy of 55 million dollars funding commitment of Asurion, a Nashville company that provides insurance for electronics and other consumer products. The undertaking includes a provision that Asurion will be the high bidder in a bankruptcy auction.

Overview of the dive:

Enjoy Technology experienced a rapid change of fortune as supply chain issues and a cash flow crisis forced it to restructure.

Founded by Ron Johnson, who once ran Apple’s retail division and JC Penney department store, Enjoy was launched in 2015. Its core service is the mobile store, which brings inventory and salespeople to the retail at customers’ doorsteps.

Enjoy went public last year through a merger with a Special Purpose Acquisition Company, or SPAC, and almost immediately began falling short of expectations and struggling with its expansion plans. .

Enjoy had ambitions to expand further into electronics and had recently launched its “Smart Last Mile” service, intended to combine an in-person retail experience with home delivery. The company also said there may be opportunities in other categories, such as home fitness, beauty and luxury apparel.

But the company’s cash crisis has thrown cold water on its plans. Much of the trouble stemmed from a shortage of Apple’s latest iPhone products in the second half of 2021. This led to quarterly sales falling short of analysts’ estimates.

The company had also bolstered its workforce and warehouse in anticipation of a massive expansion into 100 new markets. But the shortfall means the company’s losses have increased and cash burn has increased.

This year brought the departure of two CFOs within two months, as well as revelations that the company might not survive as a going concern, might have to file for bankruptcy and only had enough money to get it until June. Earlier this week, Enjoy revealed that it planned to suspend its home trading services for Apple and risked delisting from Nasdaq, less than a year after its IPO.

She is now bankrupt and looking to sell herself. Asurion, which is also providing a $2.5 million bridge loan to Enjoy to get through the first week of July, would be well positioned to take over the business if its DIP financing package is approved. His commitment to provide a DIP loan is tied to a stalking horse bid for Enjoy, which would establish the basis for a Chapter 11 auction.

DIP financing, stalking horse bid and auction proceedings will require bankruptcy court approval.