Tower Set to Emerge From Chapter 1115 Mar, 2004 By: Erik Gruenwedel
Tower Records & Video today will emerge from Chapter 11 bankruptcy protection with new funding, a reduced debt load and amid speculation that the venerable music chain with 93 stores will soon have a new owner.
Tower officials confirmed the official Chapter 11 termination date, but were unavailable for further comment.The West Sacramento, Calif.-based retailer Feb. 10 filed a pre-packaged financial reorganization plan in U.S. Bankruptcy Court in Wilmington, Del., under which $110 million in senior debt was converted to 85 percent equity ownership in the company in addition to $30 million in new senior notes.
Tower stores remained open during the financial reorganization.
Unlike a Chapter 7 filing that eliminates all creditor claims, Chapter 11 allowed Tower to negotiate with its lenders and creditors, according to Jay Cooper, a veteran Los Angeles-based music industry attorney.
“They can now do business and pay their debts through a series of compromises that are entered into with creditors or newly acquired funding,” Cooper said. “It's back to business as usual except that they now have a handle on their debts.”
Throughout, the prepackaged bankruptcy relations between Tower and its suppliers remained mutually supportive, sources said.