Tower Records faces liquidation
WILMINGTON, Del. — After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved 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 a bid of $134.3 million, beatingTrans World Entertainment, which had hoped to continue operating at least some Tower stores, by only $500,000.
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 on Saturday.
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, Tower 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 bankruptcy that resulted in bondholders forgiving millions of dollars in debt but taking an 85 percent stake in the company, leaving founder Ruses Solomon and his family with 15 percent.