It looks like the weak economy has claimed yet another victim. Sixth Avenue, an electronics store chain founded in Bergen County, New Jersey, in 1984, was set to begin a liquidation sale of its inventory as early as Oct. 28. The sale follows an order by a U.S. District Court judge in Newark, New Jersey, and it comes as the chain has been assessing possible bankruptcy options.
Founded in 1984, the chain had 19 stores at its peak, but only three — all in New Jersey — remain open. According to a news report, however, one of those three, the location in Paramus, has now closed as well, since it was empty as of Oct, 26 and had a hand-written sign that read “Closed until further notice,” on the door. Some industry insiders said that the chain expanded too quickly and that its stores were too big.
In an attempt to avoid Chapter 7 and Chapter 11 bankruptcy proceedings, the firm has been pursuing a procedure known as “assignment for the benefit of creditors.” An investment firm that has previously handled corporate restructurings was chosen as the assignee. However, a U.S. District Court judge ordered the liquidation sale of all inventory after the firm defaulted on a loan for the second time in six months.
Hopefully, the chain will be able to emerge from its current situation as a leaner, more efficient company. Although Sixth Avenue has not yet declared bankruptcy, many firms in the past have benefited from doing so. Indeed, bankruptcy offers a chance to provide debt relief to firms as they restructure their balance sheet without the threat of litigation from creditors.
Source: NorthJersey.com, “Sixth Avenue may start liquidating inventory by Friday,” Joan Verdon, Oct. 27, 2011