Tower Founder Shown the Door6 Nov, 2006 By: Erik Gruenwedel
Bankrupt Tower Records, which is in the midst of liquidation of all inventory and related assets, filed a motion in bankruptcy court to terminate its $400,000 a year employment contract with founder Russ Solomon.
The West Sacramento, Calif.-based music retailer, which first filed for Chapter 11 fiscal restructuring in 2004, at the time agreed to uphold a 2003 employment contract with Solomon, who retained a 15% equity stake in the company.
When Tower's assets were acquired last month by liquidator Great American Group, a separate legal entity holding much of the retailer's debt stated it no longer required Solomon's services.
“The debtors greatly value Mr. Solomon and his knowledge of their business, the fundamental change resulting for the sale to Great American requires they reject existing employment agreement,” said the filing.
Solomon reportedly has agreed to the termination.
Filings indicated that despite recording profit of $22.4 million in fiscal 2005, same-store sales at privately held Tower fell 9% this year. The company cited a 126% increase in music downloads through the first half of 2006 coupled with loss leader pricing on music and DVDs from big-box retailers for the decision to file bankruptcy for a second time and cease operations.