Tower To Sell In Chapter 11 Bankruptcy. Trans World Losses Also Widen.

Tower Records with 89 music and video stores in 20 states last night announced that it will sell the company under Chapter 11 of the bankruptcy code. This process, which is subject to court approval,   sets in motion a events that will insure a sale within 60 days.

According to Joseph D’Amico, Tower’s recently named CEO, the filing is necessary to sell the debt ridden company. "Tower Records has conducted an extensive sale process and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders." Tower is apparently evaluating letters of  intent to buy the company.

Founded in 1960, Tower led an era of deep catalog mega-stores who not only sold the hits but offered obscure titles as well. Now with competition from file sharing and even deeper catalog available via download and online retailers like Amazon, Tower with it’s big expensive stores could not compete. It is hard to imagine how new owners could change that landscape enough to reach profit without gutting the chain.

Two weeks ago just as Tower was names "Large Retailer Of The Year" by NARM, all for major labels stopped selling to the chain amidst a mountain of past due invoices. But the industry is unlikely to want to have such a visible failure and will take advantage of $85 million in "Debtor in Possession" financing to sell product to the retailer.

TRANS WORLD TROUBLES: Meanwhile retail and wholesale giant Trans World who operates Sam Goody, Wherehouse, Strawberries Music, Second Spin and the recently acquired Musicland reported strong revenue increases alongside widening losses. Overall sales hit $298.3 million, 18% increase more than last year thanks to the acquisition of Musicland. But comparable store sales dropped 7%  and net losses reached $7.7 million or 10% more than last years loss. (SEC Filings)

MORE: Read the Tower press release here and official bankruptcy updates here. A pdf of the court filing is here.