Enjoy Technology, led by ex-Apple and JC Penney executive Johnson, files bankruptcy
Reuters
Published Jun 30, 2022 03:15PM ET
Updated Jun 30, 2022 04:00PM ET
By Jonathan Stempel
(Reuters) -Enjoy Technology Inc, a Silicon Valley retailer led by former Apple Inc (NASDAQ:AAPL) and JC Penney (OTC:CPPRQ) Co executive Ron Johnson, filed for bankruptcy protection on Thursday, fewer than nine months after going public through a special-purpose acquisition company (SPAC).
The Palo Alto, California-based startup said it plans to sell its U.S. assets to Asurion LLC, a technology repair company.
Asurion agreed to provide $55 million of financing so Enjoy can operate while it reorganizes under Chapter 11 protection from creditors with the U.S. bankruptcy court in Delaware.
Founded by Johnson in 2014, Enjoy operates what it calls mobile retail stores that let customers buy smartphones and other technology that they can set up at home.
But in a court filing, a restructuring adviser said Enjoy has struggled with declining liquidity, in part because a large number of SPAC investors took back their money, as well as the "supply chain crisis" and an inability to retain staff.
Enjoy said it has just $523,000 of cash on hand. It also said its British unit is eliminating 411 jobs, or about 18% of the company's total workforce.
SPACs, or blank-check companies, are listed shell entities that let sponsors take private companies public faster than through traditional initial public offerings.
Many investors are pulling back from SPACs as the vehicles, which critics say are prone to conflicts of interest and shoddy due diligence, face tighter regulatory scrutiny.
Share prices of 291 companies that went public through SPAC mergers between 2019 and 2021 have fallen an average 58% since the mergers closed, according to University of Florida finance professor Jay Ritter, citing data from SPACResearch.com.
Johnson became a star executive overseeing the growth of Apple's retail stores.
He became JC Penney's chief executive in November 2011, but was ousted 17 months later after his turnaround plan, emphasizing fixed prices and eschewing coupons, alienated customers used to big discounts.
In late afternoon trading, Enjoy shares were down 27.8% at 21 cents. They peaked at $12.16 on Oct. 12.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.