Jun 30, 2022
SPAC Led by Former Apple Executive Goes Bankrupt Less Than a Year After Going Public
, Bloomberg News
(Bloomberg) -- Enjoy Technology Inc., a retail startup founded by former Apple Inc. executive Ron Johnson, filed for bankruptcy on Thursday -- less than a year after going public through a merger with a blank-check company.
The company plans to keep operating and sell itself to Asurion LLC while in Chapter 11 bankruptcy, court papers show. Asurion has agreed to lend $52.5 million of new money to fund the Chapter 11 case.
Enjoy operates what it calls mobile retail stores that help consumers buy and set up technology gadgets, like mobile phones, in their homes. The Palo Alto-based company, which was founded in 2014, has struggled to raise the capital needed to fund its operations lately, according to court papers.
The company is now seeking protection from creditors “due to a rapidly declining cash position that has rendered them unable to pay operating expenses, including payroll,” Enjoy’s lawyers wrote in bankruptcy court filings. Enjoy has begun dismissing more than 400 UK-based employees, or roughly 18% of its total workforce, in connection with the bankruptcy, a regulatory filing shows.
Enjoy went public last year by way of a merger with a so-called special-purpose acquisition company, namely Marquee Raine Acquisition Corp. The move brought in $112.6 million of fresh capital after the repayment of certain loans and transaction costs, according to court papers. Enjoy was among many to be hit by high investor redemption rates -- when SPAC investors pull out of a deal they don’t like -- leaving it with a smaller chunk of cash than initially expected.
Johnson, the company’s chief executive officer, founded Enjoy in 2014. He is better known as the co-creator of Apple’s retail arm and for an attempted turnaround of J.C. Penney Corp. Johnson lent $10 million to Enjoy shortly before the bankruptcy to help facilitate the company’s sale, court papers show.
Enjoy’s bankruptcy filing comes just weeks after electric-vehicle startup Electric Last Mile Solutions Inc. filed for Chapter 7 bankruptcy, signaling that more de-SPACs may need to close up shop. All told, there are more than 35 former SPACs that trade below $1 and at least 65 likely to need more financing over the next year just to keep the lights on, according to Bloomberg data that estimates a company’s cash needs.
The case is Enjoy Technology Inc., 22-10580, U.S. Bankruptcy Court for the District of Delaware.
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