Enjoy Technology has an interested buyer that wants to keep the mobile store operator alive and running.
Enjoy filed for Chapter 11 bankruptcy Thursday under the strain of a major cash crunch. The company disclosed in a securities filing Thursday that Asurion, which sells insurance on electronics and other consumer goods, has committed to providing debtor-in-possession financing under a deal that would make Asurion the stalking horse bidder in a bankruptcy auction.
In court papers, John Boken, a managing director with AlixPartners who is advising Enjoy, said that Asurion plans to keep Enjoy’s core U.S. business operating and retain “many” of its employees under a sale.
In the weeks leading up to its bankruptcy, Enjoy Technology, founded by ex-J.C. Penney CEO Ron Johnson, had contacted 23 potential buyers. This was happening as the company was scrambling for cash. At the time it filed, Enjoy had only $523,000 in cash on hand — not enough to make its next weekly payroll, Boken said.
Before signing a letter of intent with Asurion, Enjoy had signed with a different prospective buyer, left unnamed, that would have kept the company out of bankruptcy but transformed Enjoy into a licensing company. That suitor, however, backed out of the deal, and Enjoy turned its attention to Asurion, according to Boken.
The DIP loan, along with helping to secure Asurion’s status as stalking horse bidder, would provide desperately needed capital for Enjoy in the coming weeks as the bankruptcy process plays out. Enjoy ultimately plans to sell itself to the highest bidder in a bankruptcy auction.
Enjoy launched in 2015 in Johnson’s effort to build a “commerce-at-home” channel that combines the convenience of e-commerce with the service of stores. Out of that came the mobile store, which brings inventory and salespeople directly to consumers’ homes. There, Enjoy staff can advise, upsell and help with installation. It has worked with major consumer tech brands including Apple and AT&T.
The company has long operated at a loss, but its cash burn has increased of late as supply constraints reduced its sales as the company was prepping for a major expansion. Boken said that Enjoy is still suffering “logistic, supply chain, and manufacturing challenges” as well as having difficulty recruiting and retaining sales staff for its mobile stores.
Asurion, along with providing insurance plans on electronics, also offers repair and tech support services. Based in Nashville, the company has 700 locations across the country and 23,000 employees.