Tower Records emerges from Chapter 11 bankruptcy following liquidation

By Caroline Salls

Pittsburgh, Aug. 22 - Tower Records emerged from Chapter 11 bankruptcy after its plan of liquidation took effect on Aug. 17, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Aug. 6.

As previously reported, the plan distributes all available company assets, including sale proceeds.

Treatment of creditors under the plan will include:

• Holders of administrative claims and other priority claims will be paid in full in cash;

• Holders of priority tax claims will be either paid in full in cash or in cash plus interest over a period of up to five years, at the company's option;

• Holders of trade vendor claims will receive cash equal to the secured portion of the claim and the collateral securing the claim or proceeds from the sale of the collateral, or a combination thereof;

• Holders of general unsecured claims will receive available assets, which include the remaining assets and proceeds of the sale of assets after payment of or reserve for senior claims and the administration and liquidation of the estates; and

• Holders of interests and securities subordinated claims will receive no distributions under the plan, and existing stock and interests have been canceled.

Tower is a subsidiary of Sacramento, Calif.-based MTS Inc. Tower filed for bankruptcy on Aug. 20, 2006. Its Chapter 11 case number is 06-10886.

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