Tower Records moves to protects assets
Search for buyers for record chain
February 10 2004
As expected, US retailer Tower Records has filed for Chapter 11 bankruptcy protection as its owner searches for a potential buyer.
Tower, which has downsized from around 200 stores to less than 100 in recent years, and exited key markets such as the UK and Japan, has seen its sales hit by the increasing market share taken by keenly-priced general retailers such as Wal-Mart.
Tower owner MTS has been looking for a buyer for the loss-making operation for some time. While the search continues, the company has put a proposal for restructuring the business to the courts.
Under Chapter 11 regulations, Tower could trade while it completes the plan, with protection from creditors.
Tower chief executive Allen Rodriguez said: “Court approval of the pre-packaged plan will reduce existing debt by $80m, effectively eliminating the financial risk that have faced Tower for the past three years.” The plan would take up to 60 days to implement.
