Brookstone, the luxury-gadget retailer, won bankruptcy court approval of its plan to sell the chain to a group of Chinese buyers for about $174 million that will be used to pay creditors.

U.S. Bankruptcy Judge Brendan Linehan Shannon on Monday in Wilmington, Delaware, approved the sale to a company backed by the Chinese conglomerate Sanpower Group and the Hong Kong-based private-equity firm Sailing Capital. The sale is the cornerstone of the retailer's bankruptcy exit plan, also approved today.

The Sanpower and Sailing group outbid a unit of novelty-retailer Spencer Spirit Holdings. at an auction this month, according to court documents. Spencer will get about $4.2 million in breakup fees and expense repayment. The buyers will continue operating almost all the 242 stores, closing two at most.

Brookstone will be "completely recapitalized" with a healthier balance sheet under the Sailing deal, with about $55.9 million in total liabilities, which is "$240 million less" than the current balance sheet, said Charles Dale, a lawyer for the company. The retailer is projected to make about $30.5 million in 2015 in earnings before interest, taxes, depreciation and amortization.

The Chinese group will pay $135.7 million in cash and $10 million in notes and assume about $28 million in Brookstone liabilities, court papers show.

Under the plan, unsecured creditors will share about $2.75 million from the sale proceeds after striking a deal to support the proposal. Bondholders, owed about $137.3 million, are getting less than 40 cents on the dollar, according to bondholder attorney Erez E. Gilad.

Brookstone, based in Merrimack, New Hampshire, filed for bankruptcy April 3 with a deal to sell its assets to Spencer for about $146.3 million. Brookstone struggled to adapt to a retail landscape where online competitors such as Amazon.com made its once hard-to-find products ubiquitous and consumers cut back on nonessentials.

The company saw sales fall 7.4 percent to $481.3 million for fiscal 2013 from the prior year, according to court papers. Adjusted Ebitda plummeted about 42 percent to $10.7 million.

Brookstone started in 1965 as a catalog business offering "hard-to-find tools" before opening its first store in 1973 in Peterborough, New Hampshire, according to its website. Most of its locations in the U.S. and Puerto Rico are in malls.