Tower Records filed bankruptcy last Sunday after going on hold to a number of its suppliers (see 'Tower Leaning'), and is considered a likely acquisition target for Trans World Entertainment, which also acquired the bankrupt Musicland chain a few months back (see 'Trans World Bid for Musicland Approved'). 

The bankruptcy filing, the second since 2004 (see 'Tower Files Chapter 11'), allowed Tower to get $85 million in debtor-in-possession financing from CIT Group and work out arrangements with its suppliers to continue shipments. 

The company has already received letters of intent for a purchase of the company, according to statements by its CEO, who says there are discussions ongoing with a number of potential acquirers. 

Distributors are substantial creditors of Tower, as they were of Musicland, although the scale of the debt is much smaller in this case.  Ingram, Baker and Taylor, Ventura, and Image Entertainment are all owed substantial six figure amounts, as is Navarre subsidiary BCI. 

Speculation in a variety of quarters is that Trans World will pick up the chain for its debt, which would put trade creditors in a much better position than they were in the Musicland bankruptcy, in which unsecured creditors were washed. 

This should be a short story.  Final bids are due by September 22nd, and Tower is acting under fast track provisions of the Delaware bankruptcy law in its attempts to sell the company.