Group Plans to Liquidate Tower Records
By RANDALL CHASE 


WILMINGTON, Del. (AP) - After a lengthy auction stretching over two days, a 
federal bankruptcy judge on Friday 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. 

Peter Gurfein, an attorney representing Tower Records, said the company will 
be sold for an aggregate of $150 million, including the sale of various leases 
and properties. 

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. 

``This is not an easy decision,'' said bankruptcy Judge Brendan Shannon, who 
nevertheless noted that the Tower debtors and other parties had agreed the 
bidding process was conducted fairly and in good faith. 

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. 

Tower's Chapter 11 filing came two years after initial reorganization that 
resulted in bondholders forgiving millions of dollars in debt but taking an 85 
percent stake in the company, leaving founder Russ Solomon and his family with 
15 percent. 

Solomon founded Tower in Sacramento, Calif., in 1960, starting by selling 
records out of his father's drug store and eventually opening the company's 
landmark store on Hollywood's Sunset Boulevard in 1969. As part of the bankruptcy 
auction, the Sunset property will be sold for $12 million. 

Michael Bloom, an attorney representing Tower's secured trade creditors, 
urged Shannon to consider the closeness of the bids and the effect that 
liquidation would have before deciding whether to approve the sale. 

``We can save this company or we can liquidate it,'' Bloom argued. ``... 
Sometimes, the highest bid is not the best bid. In this case, your honor, we 
believe the best bid is the Trans World bid.'' 

Trans World, which has about 1,100 mostly mall-based stores nationwide, has 
recently acquired other music retailers such as Sam Goody and Wherehouse Music, 
consolidating most of its acquisitions under the FYE name, which stands for 
For Your Entertainment. 

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. 

But Jay Indyke, an attorney for Great American, said Trans World and its 
bidding partners had discussed liquidating inventory and closing about two dozen 
Tower stores, and that they would not say how many stores they would continue 
to operate.