MTS Inc., the parent company of Tower Records, filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Wilmington, Delaware.  If approved by the judge, the plan will allow the closely held MTS to swap some $80 million in debt for 85% equity in the 93-store music chain (see 'Tower Records to File Chapter 11').  Tower officials expect the plan to be approved and feel they will be able to complete the reorganization and emerge from Chapter 11 within 60 days.  Early reports indicate that the reorganization plan will allow Tower to avoid a large number of store closings or employee layoffs.

Tower Records, which virtually invented the music megastore way back in 1960, once had 171 stores and annual sales of over $1 billion.  Currently the chain controls some 93 stores with sales (as of April 2003) of $428.9 million (for the previous 9 months).