NEW YORK (Reuters) – The parent of Tower Records, a high-profile recorded music and entertainment retailer, plans to file for Chapter 11 bankruptcy protection after failing to find a suitable buyer, sources familiar with the matter told Reuters Thursday.
The filing by MTS Inc., expected as soon as this week, would cap a long period of distress for the privately-held international chain of about 100 retail stores, which put itself up for sale last year amid declining sales and growing losses.
MTS declined to comment.
A Chapter 11 filing would likely involve a debt-for-equity swap that would take control of the Sacramento, Calif.-based company away from the founding Solomon family, the sources said.
Like other retailers in the recorded entertainment industry, Tower suffers from stiff competition from mass market retailers such as Wal-Mart Stores Inc. (WMT: Research, Estimates), and high costs from retail leases.
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