Tower Records on August 20 filed for Chapter 11 in federal bankruptcy court. According to the filing in Delaware, eight entities own and operate the 89-store chain of music and entertainment stores plus a direct sales network and warehouse distribution facility under the Tower Records name. According to the filing, there are thousands of potential creditors, and among the 40 largest are Six Degrees Records ($1.9 million) in San Francisco; International Periodical ($1.3 million) in Chicago; City Hall Records ($595,000) in San Rafael, California; and Baker & Taylor Book ($437,000) in Chicago). Tower blames their demise to ‘industry-wide decline in the sales of physical music and video products" and "intense competition from music downloading (legal and illegal); ‘big-box’ retailers which use music and video as loss-leaders and other industry-wide factors." Tower has indicated that it would prefer to keep it business intact through the sale, through an asset liquidation, which includes the venerable Tower brand name could also occur. In the meantime, Tower is aiming to complete the sale within the October timeframe, a schedule that would allow the chain to focus on the all-important holiday buying season. We hope that Tower can find a means to this end so that music fans can still enjoy Towers’ huge inventory and selection. The last thing that we need is to depend on the likes of Target and Best Buy for our CD purchases.
Tuesday, August 22, 2006
TOWER RECORDS FILES FOR BANKRUPTCY; SEEKS IMMINENT BUYER
Tower Records on August 20 filed for Chapter 11 in federal bankruptcy court. According to the filing in Delaware, eight entities own and operate the 89-store chain of music and entertainment stores plus a direct sales network and warehouse distribution facility under the Tower Records name. According to the filing, there are thousands of potential creditors, and among the 40 largest are Six Degrees Records ($1.9 million) in San Francisco; International Periodical ($1.3 million) in Chicago; City Hall Records ($595,000) in San Rafael, California; and Baker & Taylor Book ($437,000) in Chicago). Tower blames their demise to ‘industry-wide decline in the sales of physical music and video products" and "intense competition from music downloading (legal and illegal); ‘big-box’ retailers which use music and video as loss-leaders and other industry-wide factors." Tower has indicated that it would prefer to keep it business intact through the sale, through an asset liquidation, which includes the venerable Tower brand name could also occur. In the meantime, Tower is aiming to complete the sale within the October timeframe, a schedule that would allow the chain to focus on the all-important holiday buying season. We hope that Tower can find a means to this end so that music fans can still enjoy Towers’ huge inventory and selection. The last thing that we need is to depend on the likes of Target and Best Buy for our CD purchases.
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