Tweeter shuts down, leaving workers without pay
The owners of bankrupt electronics chain Tweeter abruptly shuttered its stores today and fired more than 600 employees at 70 stores across the country days before the company was set to close for good, according to five Tweeter store managers and executives briefed on the situation.
The employees, including roughly 150 in Massachusetts, are still owed at least one week's pay, vacation time, and hundreds of thousands of dollars in bonuses that were promised as part of the liquidation sale, said the managers and executives who declined to be named because they are still owed money. Customers are unable to pick up merchandise they had already purchased and the liquidators handling the closing also have not been paid. Meanwhile, there is roughly $14 million worth of goods left in the locked stores.
The owners of the chain, Schultze Asset Management , shut down Tweeter after they paid off millions of dollars to the largest secured creditor -- Wells Fargo, according to the managers and executives. Schultze Asset Management, a New York investment firm which had also loaned money to Tweeter, was the second biggest creditor and decided against putting additional money into the company to cover expenses to wind down the operations. Tweeter had planned to close its shops on Sunday.
Schultze Asset Management, which had bought Tweeter out of its first bankruptcy in July 2007 for $38 million , did not return calls seeking comment.
Craig Boucher , who works for turnaround company CRG Partners and has served as chief restructuring officer for Tweeter since it filed for bankruptcy protection again last month, declined to comment except to say: "Things will take care of themselves in due time."
A spokeswoman for Hudson Capital Partners , one of the firms running Tweeter's going-out-of business sale, declined to discuss the matter. Tiger Capital Group, another liquidator, did not return calls seeking comment.
Kenneth Howell , who worked as a store manager for the Tweeter shop in Burlington, Mass., said he received a call this morning from an operations manager that he should not show up to work and if he entered the building, he would be responsible for any lost merchandise. Howell said he was told Schultze Asset Management was planning to file for Chapter 7 bankruptcy protection and no information was available regarding unemployment, insurance, and owed wages.
"The employees don't deserve this. It's bad enough to be liquidated," Howell said. "But to be shut out of the stores, without wages and everything else owed. And now customers can't get their merchandise. It's totally unfair and pretty sad."
Howell and other Tweeter employees interviewed said they are planning to file complaints with the Massachusetts Attorney General's office. Harry Pierre , a spokesman for the Attorney General's office, said: "We are aware of the situation and reviewing it."
Arthur Perkins , president of the Turnaround Management Association, which includes liquidators, bankruptcy attorneys, and turnaround executives, said it is unusual for retailers to shut down in the middle of a liquidation sale.
If Schultze Asset Management files for Chapter 7 bankruptcy protection, a trustee would come in and run the company, dispose of assets, and try to settle some of the claims from hundreds of unsecured creditors -- including customers and vendors -- who have to wait in line behind larger creditors.
(By Jenn Abelson, Globe staff)