Tweeter Stores to Remain Closed, Warehouse Sale to Come
Company has 15 days to remove all products and property from all stores.
It appears that Tweeter stores will not reopen after all.
Tweeter, which was granted Chapter 11 bankruptcy in 2007 and sold to liquidators, abruptly closed all its stores on Dec. 2 because it was unable to access operating funds from its lender. This happened before liquidation was complete.
Tweeter owner Schultze Asset Management, then petitioned the U.S. Bankruptcy Court for the District of Delaware in Wilmington for its status to be converted to Chapter 7 bankruptcy, for lender Wells Fargo to open up access to operating funds and for it to be allowed to reopen stores.
Chapter 7 was granted and George L. Miller was appointed trustee.
According to a Dec. 15 filing by the court, however, the reopening of stores won’t happen. The “expenses expected” and the “logistical difficulties in reopening the retail stores and recalling employees to work at a going out of business sale have been daunting,” it wrote.
The court adds that trustee George Miller is to vacate as many locations as possible by Dec. 31.
This presumably means emptying out all remaining unsold products from stores and all other property from corporate headquarters in Canton, Mass. and collecting all company vehicles — all to be done within 15 days.
The trustee has determined, according to the filing, that it should hand over all assets of the company to liquidator Apto Solutions of Atlanta. Everything — equipment, inventory, fixtures — will be sold in a warehouse sale.
From the court filing:
Schultze [Asset Management, which owned Tweeter leading up the bankruptcy] has agreed to agreed to a carve out from the proceeds of the Warehouse Sale from the Trustee’s compensation, compensation for Trustee’s counsel and distribution to general unsecured creditors of the Debtors.
Apto will collect all the property and conduct the sale at its warehouse over “a period of months,” according to the filing.
It’s unclear whether Apto will conduct a physical warehouse sale, sell the products through its Web site or a combination of both.
It appears that Apto will keep 30 percent of the warehouse sale proceeds and Schultze Asset Management will get 70 percent. From the filing:
Seventy percent of the net sale proceeds from the auction sale [after Apto’s expense deductions] … shall be available after Apto’s commission is deducted. From this 70 percent will be deducted a fee for the Trustee’s compensation and his counsel’s fees. The remaining funds are to be split between Scultze and the Debtor’s bankruptcy estates 87.5% and 12.5% respectively.
Several Tweeter employees told CE Pro they been contacted about their availability for returning to work at the stores. That will not happen.
A small sample of employees tells CE Pro that they have received the “regular pay” that was owed to them. This was apparently freed up after Schultze petitioned the court to free up funds from the lender.
However, those employees tell CE Pro that they have not received accrued bonuses or vacation time payments.
Tom has been covering consumer electronics for six years. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Now, as senior writer/technology editor of CE Pro magazine since 2003, he dabbles in all departments and offers expertise in marketing. Have a suggestion or a topic you want to read more about? Email Tom at [email protected]
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