According to the Associated Press, a federal bankruptcy judge on Friday has approved the sale of California-based Tower Records to Great American Group, which plans to liquidate the music retailer.
After almost 30 hours of what attorneys described as "robust" and "vigorous" bidding, Great American won with a bid of $134.3 million, beating Trans World Entertainment, which had hoped to continue operating at least some Tower stores, by a single bid increment of $500,000. The deal includes the sale of various leases and properties. Attorney Peter Gurfein said Great American plans to begin the liquidation process and going out of business sales on Saturday, which eventually will result in the elimination of the jobs of some 3,000 Tower employees. Tim Pohl, an attorney representing Trans World, asked the judge whether $500,000 was "a material enough difference" to liquidate a company, as opposed to keeping thousands of people employed.
Tower Records, which has 89 stores in 20 states and owes creditors about $200 million, filed for Chapter 11 reorganization in August. In its filing, the company said it has been hurt by an industrywide decline in music sales, downloading of online music and competition from big-box stores such as Wal-Mart.
Besides the loss of so many jobs, Tower represents one of the largest buyers of independent music and magazines. The loss of the stores will likely have a noticeable effect on independent labels and bands.