Tower Records’ reorganization plan was approved today (March 15) by a bankruptcy court in Wilmington, Del., making the retailer’s stay in Chapter 11 the shortest by a music-related company in more than a decade. In a pre-packaged plan, Tower filed for Chapter 11 protection Feb. 9.
A lawyer who was at the proceedings tells Billboard.biz, “The plan was confirmed, but the effective date for the emergence should come within the next 10 days. The timing is dependent on [Tower’s] decision to assume or reject contracts and leases.”
With the confirmation of the plan, Tower is now owned 85% by former bondholders, which had their debentures converted to equity. Tower founder Russ Solomon and his family trust retain a 15% stake in the chain.
While Tower was operating under Chapter 11, management said that the debt-to-equity conversion would provide the chain with a stronger balance sheet. Such a development would allow the new owners the luxury of selling when they could realize a better value for the chain, instead of at the fire-sale prices that suitors offered when the company was being shopped by Greif & Co.
Tower CEO Allen Rodriguez says the judge’s confirmation of the Tower re-organization plan is a “reflection of how good our operations are and how solid our capital structure is.”
Rodriguez added that other factors that helped Tower quickly navigate the Chapter 11 process include “the support of suppliers and the sacrifices that the Solomons made and Russ’s [Solomon, Tower founder] desire to do right by the company and employees.”
