Tower Records to be liquidated; 3,000 are expected to lose jobs
After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved the sale of California-based Tower Records...
The Associated Press
WILMINGTON, Del. — After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved the sale of California-based Tower Records to Great American Group, which plans to liquidate the music retailer.
After almost 30 hours of what attorneys described as "robust" and "vigorous" bidding, Great American won with an offer of $134.3 million, beating Trans World Entertainment, which had hoped to continue operating at least some Tower stores.
Peter Gurfein, an attorney representing Tower Records, said the company will be sold for an aggregate of $150 million, including the sale of various leases and properties.
Gurfein said Great American plans to begin the liquidation process and going out of business sales today, which eventually will result in the elimination of the jobs of some 3,000 Tower employees.
"This is not an easy decision," said bankruptcy Judge Brendan Shannon, who nevertheless noted that the Tower debtors and other parties had agreed the bidding process was conducted fairly.
Tower Records, which has 89 stores in 20 states and owes creditors about $200 million, filed for Chapter 11 reorganization in August. In its filing, the company said it has been hurt by an industrywide decline in music sales, downloading of online music and competition from big-box stores such as Wal-Mart.
Tower's Chapter 11 filing came two years after initial reorganization that resulted in bondholders forgiving millions of dollars in debt but taking an 85 percent stake in the company, leaving founder Russ Solomon and his family with 15 percent.
Solomon founded Tower in Sacramento, Calif., in 1960, starting by selling records out of his father's drug store and eventually opening the company's landmark store on Hollywood's Sunset Boulevard in 1969. As part of the bankruptcy auction, the Sunset property will be sold for $12 million.