Online retailer Enjoy Technology Inc received approval from a U.S. bankruptcy court on Friday to sell its business to technology repair company Asurion LLC for $110 million.
U.S. Bankruptcy Judge J. Kate Stickles in Wilmington, Delaware, signed off on the sale at a hearing on Friday, saying it was a reasonable exercise of the debtor’s business judgment and was a fair, arms-length transaction.
Enjoy, a Palo Alto, California-based startup, filed for bankruptcy protection on June 30 with $26 million in debt. Asurion offered to provide the company with a $55 million bankruptcy loan and to buy it.
Enjoy had contacted more than 30 other potential suitors since filing for bankruptcy, but it cancelled a planned auction after none of them chose to outbid Asurion.
Founded in 2014 by former Apple Inc and JCPenney Co-executive Ron Johnson, the company filed for Chapter 11 protection fewer than nine months after going public through a special-purpose acquisition company (SPAC).
Enjoy sells smartphones and other technology products in the U.S., U.K. and Canada, delivering products and providing tech support to customers’ homes.
Enjoy attributed its bankruptcy filing to declining liquidity, in part because a large number of SPAC investors took back money they had committed to Enjoy. The SPAC transaction allowed the company to raise money by offering redeemable equity shares for sale, but that funding source tightened up when a larger-than-expected number of investors exercised their redemption rights rather than continuing to hold shares in the company.
Enjoy also blamed the “supply chain crisis” and an inability to retain staff as reasons for its filing. Enjoy entered bankruptcy with just $523,000 of cash on hand, according to court filings.
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.
The case is Enjoy Technology LLC, U.S. Bankruptcy Court for the District of Delaware, No. 22-10580.
For the debtor: Lauren Reichardt of Cooley and Brendan Schlauch of Richards, Layton & Finger
