Enjoy Technology Inc (ENJY.O), a Silicon Valley retailer led by former Apple Inc (AAPL.O) and JC Penney 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.