alienooze used our news submit to tell us about the financial woes of a music and entertainment chain that has been in business for over 40 years. Not even the jaw dropping talent of the American Idols are enough to bring back the droves. Tower Records Inc. on Monday filed for Chapter 11 bankruptcy protection. The filings for Tower and its parent, privately-held MTS Inc., cap a long period of distress for the money-losing chain of 93 stores, blaming competition from large retailers, digital downloading and file copying.
This type of situation is a legal strategy to keep the creditors at bay, whilst the company regroups and tries to make a comeback. In other words, they aren't done yet, but they are very close.
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MTS, which is based in West Sacramento, California, and 15 affiliates sought protection from creditors from the U.S. Bankruptcy Court in Wilmington, Delaware. MTS listed more than $ 100 million of assets and more than $ 100 million of debts in its filing. MTS expects to emerge from Chapter 11 within 45 to 60 days. It plans to swap $ 110 million of senior debt for $ 30 million of new senior notes and an 85 percent equity stake. Existing equity holders would retain a 15 percent stake. The CIT Group/Business Credit Inc. and other lenders are providing up to $ 100 million of debtor-in-possession financing to keep MTS operating as it reorganizes. Tower, which opened its first store in 1960, has been hurt from stiff competition from retailers as Wal-Mart Stores Inc. and Best Buy Co., and high lease costs. Digital downloading and file copying crimped sales and led to rising losses, the company has said. |
How often have we listened to this tiresome refrain? Do the record companies see what is happening? They should be busting their humps to keep stores like Tower in business.
Source: Yahoo!
