Tweeter Home Entertainment Group, which filed for bankruptcy protection last month, accepted a $38 million bid for its assets from a New York investment firm yesterday.
The Canton-based consumer electronics chain said in a prepared statement that the deal to sell itself as a going concern to Schultze Asset Management LLC of Purchase, N.Y., could be finalized as early as today if it is approved this morning by a federal judge in Delaware.
Both Tweeter and Schultze are very excited about this pending acquisition and are committed to emerging from this restructuring process as a stronger, more competitive organization, Joe McGuire, Tweeters chief executive, said in the statement.
The statement did not say what would happen to Tweeters current management team, and a company spokesman declined to comment.
While the firms declined to detail the $38 million deal yesterday, a June 26 press release from Tweeter said that in addition to $38 million in cash, Schultze originally offered to assume $8 million of its liabilities and provide a $10 million loan that Tweeter would use to pay for operating expenses.
Tweeter disclosed a restructuring plan in March that called for closing 49 of its 153 stores and cutting 650 jobs to deal with a decline in business the company attributed to diminished demand for projection TVs and falling prices for flat-panel TVs. In May, it reported a $38 million operating loss for the first three months of the year.
When Tweeter finally filed for protection with the US Bankruptcy Court in Wilmington, Del., on June 11, the companys debt totaled more than $190 million to as many as 50,000 debtors.
The filing also put an end to severance package payments promised to Tweeter employees who agreed to stay on to help the 49 stores close.
In response to complaints from workers, the firm said last month it would compensate former employees for unused vacation time or sick days they have accumulated in the 180 days prior to the bankruptcy filing, and noted that workers can file a claim to the court as creditors to try to recover some severance pay.
Tweeter said it will appear before the Bankruptcy Court today at 9:30 a.m. to seek approval for the proposed sale.
Based on information made available to the company, the offer from Schultze is the highest bid; Whippoorwill Associates Inc. and Bay Harbour Management L.C., together had made a $10 million bid, but the two investment firms only sought to purchase Tweeters 18.75 percent holdings of Tivoli Audio LLC, a Boston audio product maker.
Under these circumstances it would be atypical for the court to reject the debtors request, said Thomas Bean, bankruptcy lawyer and partner based at the Boston office of McDermott Will & Emery LLP.
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Correction: Because of a reporting error, a story in yesterday's Business section about the sale of Tweeter Home Entertainment Group through the bankruptcy process incorrectly stated the number of creditors listed by the company. Tweeter is estimated to have as many as 50,000 creditors.