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 continue operating and selling itself to Asurion LLC during Chapter 11 bankruptcy, according to court documents. Asurion agreed to loan $52.5 million in new money to fund the Chapter 11 case.
Enjoy operates what it calls mobile retail stores that help consumers purchase and install technological gadgets, such as cell 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 in recent times, according to court documents.
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 attorneys wrote in a statement. documents filed in bankruptcy court. Enjoy has begun laying off more than 400 UK-based employees, around 18% of its total workforce, as part of the bankruptcy, according to a regulatory filing.
Enjoy went public last year through a merger with a so-called special purpose acquisition company, namely Marquee Raine Acquisition Corp. The move raised $112.6 million in fresh capital after some loan repayments and transaction fees, according to court documents. . Enjoy was among many to be hit by high investor redemption rates – when SPAC investors back out of a deal they don’t like – leaving him with a smaller chunk of the money than originally expected. .
Johnson, the company’s CEO, founded Enjoy in 2014. He is best known as the co-founder of Apple’s retail arm and a turnaround attempt by JC Penney Corp. Johnson loaned Enjoy $10 million shortly before the bankruptcy to help facilitate the sale of the business, court documents 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 SPACs may have to close shop. In total, there are more than 35 former SPACs trading below $1 and at least 65 likely to need more funding over the next year just to keep the lights on, according to data from Bloomberg. who estimate a company’s cash flow needs.
The case is Take advantage of technology22-10580, United States Bankruptcy Court for the District of Delaware.
Reporting by Jeremy Hill and Bailey Lipschultz for Bloomberg News.