Minneapolis, Musicland Holding Corp filed for Chapter 11 bankruptcy protection. In doing so, the retailer pointed to a struggling market for music and movies, growing competition from discounter retailers and the growth of music downloading. The entertainment retailer said the move was necessary to complete its restructuring initiatives and refine its business model. The company has received commitments for up to $75 million in debtor-in-possession (DIP) financing from its existing bank group, led by Wachovia as agent, which will enable it to continue to operate during the restructuring period.
The company operates more than 800 retail stores and Web sites under the names Sam Goody, Suncoast Motion Picture Company and MediaPlay.com.
"We have been exploring various options for cutting costs, such as the impending closure of the Media Play chain," Musicland President and CEO Michael J. Madden said. "We believe that the decisive action we are taking provides the company with the most effective means to restructure our operations, strengthen our balance sheet and position us to compete more effectively in the current music and movies industry environment."
The company intends to continue normal operations and launch new business initiatives during 2006, he added.