Ultimate Files Chapter 11, Cites ‘Significant Downturn'

By Alan Wolf -- TWICE, 1/27/2011

Thornton, Colo. - Ultimate Acquisition Partners, the parent company of the 46-store A/V and appliance chain, has filed for Chapter 11 bankruptcy protection in Delaware.

In the filing, CEO Bruce Giesbrecht said the action was prompted by "a significant downturn in business" at some Ultimate Electronics locations and the refusal of certain vendors to ship products on open credit.

The company, which is 71 percent held by chairman Mark Wattles' investment firm, Wattles Capital Management, and 25 percent held by Hewlett-Packard, is seeking to use cash collateral to continue day-to-day operations and pay its vendors.

Many of the chain's vendors have agreed to reopen their credit lines once their payables are paid, Giesbrecht noted.

Top unsecured creditors include New Age Electronics/Synnex ($5.5 million), Sony Electronics ($4.8 million), GE Money Bank ($3 million) and Monster ($2.3 million).

Manufacturers owed between $1 million and $2 million include, in descending order, Klipsch, Mitsubishi, Toshiba, Haier and Whirlpool.

The company has accounts receivable of about $2 million, inventory valued at $98 million and real estate holdings valued at $12.8 million. Liabilities are between $100 million and $500 million, court documents show.

This is the second filing for Ultimate Electronics in six years. Wattles, the founder of Hollywood Video and a dissident Circuit City shareholder, bought a controlling interest in the chain in 2005, filed Chapter 11, and reacquired the business in a bankruptcy auction later that year.

Since then Wattles built the Colorado-based company out from 32 to 46 stores, including some in distant markets in the Northeast, and added new categories to its core A/V mix, including major appliances and billiard tables.

The chain ranks 29th on the TWICE Top 100 CE Retailers roll, with $443 million in sales in 2009.