Tower Records Announces Chapter 11 Bankruptcy
Tower Records has officially filed for Chapter 11 bankruptcy protection. Talk of the filing increased in industry circles as Tower recently failed to fulfill its financial obligations to record labels that extended credit or product to the retailer. Tower’s filing with the court remarked, “the brick-and-mortar specialty music retail industry has suffered substantial deterioration recently…this process, which is subject to court approval, sets in motion a timeline of events that will ultimately insure a sale of the company within approximately 60 days of the filing date.” Tower is scheduled to appear in a bankruptcy court in Delaware today. It is not clear if Tower has already found a suitor, but the filing will allow the company to sell its assets in a court-guided process.
The company is aiming to complete the sale as soon as possible to allow the new buyer to focus on the Christmas buying season. “Tower Records has conducted an extensive sale process and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders,” CEO Joseph D’Amico declared. To keep the chain afloat in the short term, Tower has entered into an $85 million debtor-in-possession financing arrangement with CIT.