Sharper Image Files for Bankruptcy Protection By REUTERS Published: February 20, 2008 Filed at 9:13 a.m. ET NEW YORK (Reuters) - Sharper Image Corp <SHRP.O>, the store and catalog retailer whose products include air purifiers and massage chairs, has filed for Chapter 11 bankruptcy protection, saying declining sales and three straight years of losses led to a shortage of liquidity. The San Francisco-based company filed for protection late Tuesday with the U.S. bankruptcy court in Wilmington, Delaware. Sharper Image said it had $251.5 million of assets and $199 million of debts as of January 31, according to the filing. Cash on hand totaled about $700,000, the filing shows. "Sharper Image is in a severe liquidity crisis," Chief Financial Officer Rebecca Roedell said in a separate filing. She said the company has suffered from increased competition, narrowing margins, litigation, lower consumer and market confidence, tighter credit from suppliers, and poorly performing stores. "The foregoing has been compounded by the ever-tightening and volatile credit and financing markets," she added. Sharper Image has seen its sales decline steadily since 2004, and it has posted net losses in fiscal 2005, 2006, and 2007. According to court papers, the electronics retailer partly blamed "negative publicity" surrounding litigation involving its Ionic Breeze air purifiers for its falling revenues. In October the company was denied federal court approval for a settlement of class-action suits related to the air purifiers. Following the ruling, Sharper Image's stock fell 18 percent, weakening support from the company's suppliers and hurting working capital as creditors tightened or withdrew credit terms, according to court documents. Sharper Image is seeking a $60 million loan arranged by Wells Fargo Retail Finance LLC to keep operating, court papers also show. The company said in a separate filing that it replaced Chief Executive Steven Lightman with Robert Conway on February 14.