Handleman liquidation won't provide full payment to its creditors

By Lisa Kerner

Charlotte, N.C., June 30 - Handleman Co. said that as of May 2, proceeds from the liquidation of its assets will not be enough for the company to pay its creditors in full.

The company, under the liquidation basis of accounting, expects to report that the excess of its liabilities over the net proceeds from the liquidation of assets to be in the range of $5.5 million to $6.3 million, according to a form 8-K filed with the Securities and Exchange Commission.

Handleman said the cash available for payment to general unsecured creditors is expected to be in the range of 80% to 85% of the claims.

According to Handleman, the process of liquidating its assets and reconciling creditors' claims could take at least six to 12 months.

As previously reported, the Circuit Court for Oakland County, State of Michigan, granted a request by Handleman and declared that the company's shares would be non-transferable. They became non-transferable on June 20.

In October 2008, Handleman shareholders approved the company's plan of liquidation and dissolution.

Handleman blamed its decision to liquidate on dramatic changes in the music industry, which was the company's primary source of revenues.

In June 2008, Handleman sold its music inventory and some other assets related to its Wal-Mart business in the United States to Anderson Merchandisers, LP.

The company sold its Canadian operations to Anderson and sold its artist-to-market distribution unit to Eurpac Service, Inc. in July 2008.

A majority of Handleman's U.K. operations and assets were sold to a subsidiary of Tesco plc in September 2008.

Troy, Mich.-based Handleman was a category manager and distributor of prerecorded music to retailers.

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