The Rise and Fall of Tweeter

Kilroy,

You can’t take this personally, it’s just comedy!

Does anyone know the status of this bk??  How the sale of assets is going, etc??  Any news at all??

http://online.barrons.com/article/SB124122579378179443.html?mod=googlenews_barrons

Check out this article…looks like Schultze might finally know how people he screwed over feel….he has nerve to belly ache about getting ripped off after what he did to people in this Tweeter bk….karma.

Just went back to check something in this article and noticed our guy Todd getting a whack from a 0575 tech.

Yes, Todd’s emails could get long occasionally but my goodness what a difference he made in our operation while he was with the company. I was in the service industry for 20+ years and met a lot of people along the way but there is no doubt that Todd was the most talented guy I ever met. 

So what if he was a little wordy. It sure beat the Canton Mafia that last year that never said anything constructive or important to anyone ever.

MARCH 2009 BEACON (The Strategic Beacon is a monthly eNewsletter produced by The Stratecon Group)
Tweeter Returns Fire: Company Asks Judge to Throw Out Employees Lawsuit

Schultze Denies Responsibility; Employees Lawyer Remains Confident

<March 4, 2009>Round two of the legal entanglement between terminated Tweeter employees and the company played out last week and again early this week as the deadline for a response from Tweeter trustee George L. Miller and Schultze Asset Management (Schultze) expired within the last few days. It was a flurry of legal documents in which the defendants staked out their respective positions, providing a substantive “push back” to attorneys representing the employees.

Background…

Late last year, Tweeter employees asserted that the company had violated certain provisions of the Worker Adjustment and Retraining Notification Act (the WARN Act) which requires employers to provide employees with at least sixty days advanced notification of their intention to close down a facility that employs fifty or more workers. Tweeter employees allege that they were abruptly terminated, some at the end of October and others in November, without such notification.

The action taken on behalf of employees proposes class action status and seeks to represent all Tweeter employees who worked at a facility of fifty or more workers who were not properly notified by the company of the closure of their facility.

Things get complicated…

Complicating matters is that Tweeter Opco LLC, as well as Tweeter divisions Tweeter Newco LLC, Tweeter Tivoli LLC, and Tweeter Intellectual Property LLC all filed for bankruptcy protection on the same day the employees filed their suit-November 5, 2008.
Since that time, the bankruptcy court has approved the conversion of the bankruptcy from a Chapter 11 proceeding (commonly referred to as “reorganization”) to a Chapter 7 proceeding (commonly referred to as “liquidation”).

The response from Tweeter contained a fairly detailed and well supported argument that focused on two key issues. The first issue is whether or not the employees took an appropriate form to assert their claim. The second issue is whether or not the claim is entitled to Administrative priority as the employees assert.

Boiling it down…

Boiling down the legal rhetoric, the issue primarily comes down to whether or not the employees claim is a properly asserted WARN Act violation and, as such, entitled to what is known as “administrative priority.” If the court sides with the employees, then administrative priority means that they are entitled to a distribution of funds against their claim first…before other creditors.

If, however, the court were to side with the company, then Tweeter employees would be treated as any other unsecured creditor, which means that they would most likely see very little, if any, of the money they claim that they are owed.

Response from Schultze: Wasn’t us…

Meanwhile, Schultze Asset Management also responded to the lawsuit filed by the Tweeter employees. In a seventeen-page document, Schultze basically denied virtually all of the claims of the employees. Most notably, Schultze’s document claimed that “Schultze at no time prior to, or at the time of the Plaintiffs’ alleged termination, qualified as the Plaintiffs’ ‘employer.’”

Although Schultze claims not to be a party to this action, they then go on to assert several “affirmative defenses” including:

The Tweeter employees’ “actual employer” was in the process of seeking additional capital and business which if it had been successful in obtaining would have delayed a shutdown. Giving “employees prior notice of their possible terminations would have precluded obtaining the needed capital or new business.”

“The Plaintiffs employer was a faltering company and provided Plaintiff as much notice of termination as was practical.”

Tweeter was the victim of “unforeseen business circumstances.”
Giving advanced notice would have “damaged the business and hastened employment terminations.”

These claims are in addition to others contained in the document.

Tweeter employees lawyer: Been there, done that…

The BEACON spoke with the Tweeter employees’ attorney Stuart J. Miller of Lankenau & Miller LLP who suggested that the filings of the opposition did not assert anything that was unexpected and that most of it was typical of the responses he has seen many times in WARN Act proceedings such as this one.

When Miller was asked if he was concerned that the company’s challenge to their “adversary action” as an improper form had merit, Miller shrugged it off. “There is ample case law that clearly establishes that an adversary proceeding is the appropriate vehicle for a WARN Act claim,” he said.

On the other hand, Miller admitted that the legal team was mulling over the issue of whether to continue to assert “administrative priority” or perhaps to move forward with a “wage priority” claim, which he suggested is the very next level of priority with similar advantages and resolved one of the issues raised by Tweeter.

“We are not fixated on the issue of whether it is an administrative priority claim or a wage priority claim,” Miller said. “But we are very confident our overall action will move forward.”

Miller said that the situation was sensitive and that he could not give this reporter any details but that “they are working on resolving” some of the issues in the company’s Motion to Dismiss. When I asked if he meant to suggest that they were in direct negotiations with the defense team, he declined to answer.

“Either we will resolve it, or we will oppose it,” Miller said, referring to the company’s motion. He went on to suggest that he anticipates a response or resolution to the motion within the next two weeks or so.

When Miller was asked about the response from Schultze, he said that he was not in a position to discuss the Schultze response in detail at this time. However, generally speaking, Miller characterized Schultze’s filing as a “stock response” to a WARN Act claim.

“We’ve seen those defenses hundreds of times,” Miller said. He went on to tell the BEACON that they have prevailed in many cases involving defendants offering the same responses.

When asked about Schultze’s claim that they were not his clients’ employer, Miller laughed. He then said that the BEACON should keep a close watch on what transpires relative to Schultze. “It’s going to be very interesting,” Miller promised.

FYI ...

This story is about Chris Bauer, former Tweeter trainer.

http://www.cepro.com/article/help_a_ce_veteran_combat_wifes_disability/

As a former Tweeter corporate employee in the early 2000s, I can honestly say that Tweeter’s demise is truly a shame, but not at all suprising.

This article does an excellent job of outlining many of the factors that contributed to the collapse, but leaves out the major one: a total lack of preparedness and planning by the executive team (VP and up) during the Jeff Stone era. The McGuire era gets the blame, but the foundation for the collapse was laid under Stone.

Tweeter had no idea how to cope with a changing retail landscape. They tried to compete on price with Big Boxes, which can’t be done by a company of this size. They completely underestimated the effect of increased shopping online. and worst of all, they had no idea how to operate in a post dot com bubble, 9/11 economic landscape when every other person you passed on the street was not a millionaire. Lastly, the last bastion of Tweeter, the plasma TV dropped in price 50% year over year to the point when Wal Mart had comparable models at much lower prices. The company just simply failed to adapt to a rapidly changing landscape.

As far as direction, there was none. The company had started to lose all concept of what they were. Advertising messages changed daily, product mix went from mid-to-high end, to discount. Anyone remember the warehouse sale in Canton? If you do, you know those were not typical Tweeter customers driving off with Mitsubishi HDTVs in the backs of broken down pickups.

The final straw, as mentioned in the article, was the introduction of all the Sound Advice execs. The poor folks from Florida were thrown into the lions den. They were woefully unprepared for running a company 5X larger than what they were used to. They also were unprepared for the universal loathing they received. From the Tweeter side of that argument, how could they not be? Sound Advice was the company that was ACQUIRED - why then, would everything that was Tweeter, be changed to how things were done at Sound Advice?

The company got too big, too fast. They overexpanded, both organically and through acquisiton. And they drastically overestimated their potential for growth.

Blame the last crop of execs to go through the Tweeter revolving door of the last decade, but recognize that in many cases, they were only working with the mess that was handed to them by their predecessors.

You do give a detail here. I have study a destiny about this on different articles written by other people, merely I must admit that you experience showed your point here!.
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A few things:

1) Kilroy: Don’t be so fast to correct spelling and punctuation. Reference “The Little, Brown Book” for proper use of commas in your dialogue.

2) Todd was great and was well above his station.

3) Judy ‘s influence and related hirings were a major reason the company went under (combined with falling margin on flat screens). Her test-tube baby, Jose, was absolutely useless. His favorite pursuit (it’s called “forced ranking” dumbass…not “force ranking”) was just termed the #1 worst management tool by Yahoo Finance. I won’t even get into his other shortcomings.

Sorry this is a little late coming.

Hey!  Stumbled across this for some reason, noticed quite a few updates after mine. 

Thanks for the support - Kilroy, Sarah, Hoodoo.  Sorry “Region 5 Field Tech” feels the way he does..  Certainly disagree with him about Ronnie.  R5FT may not remember that Houston Service was typically at or near the top of the ranks in all performance measures at Tweeter.

Ronnie was an effective manager with a great crew of people working for him - maybe one reason he could go home early once in a while.  None better!

Yes, yes, I’m long winded, particularly in print.  Have heard that many times.  I like to work every plan through - detail by detail - from start to end.  Sometimes that takes a few words on paper to define.

One criticism I have of Tweeter - often the people responsible for making plans did NOT do that - and the company suffered unintended consequences as a result. 

Can we say “Yantra?”  A great concept but just didn’t integrate smoothly into all the rest of the Tweeter systems.

America didn’t get to the moon by writing up a plan that went - “Step 1 - Launch.  Step 2 - Land.  Step 3 - Come back”, with the NASA director saying “all the rest in between is just detail, not important.” 

Execution is everything, and flawless execution requires that SOMEONE think of every possible fork in the road and plan for them.  “We’ll cross that bridge when we get there” may be a great plan for exploring Venice on vacation, but not so great if you’ve got a critical objective to reach in a specific amount of time…

I hope the HHGreggs and Ultimate Electronics’s of the world have people on board with the capability to think their plans ALL the way through before they start down the road!

Kieth, Barry from Oak Brook/Orland is now at audio consultants in Hinsdale. Here is their contact info:
110 East Ogden Avenue
Hinsdale, IL 60521-3517
(630) 789-1990
http://www.audioconsultants.com

Todd,  I was never in the field, nor was that implied in my previous post.  I do remember that R5 service was consistently at or near the top in all performance metrics.  I was one of the people that put & kept us there.  Also, I never meant to imply that Ronnie went home “early”, but when 4:59:59 rolled around, he was gone…..every single day.  I never once saw him stay even 1 minute over, waiting for that customer’s wiget.  Good luck to you.