Sixth Ave. Ordered To Shut Down
By Alan Wolf -- TWICE, 10/10/2011
Springfield, N.J. - Troubled A/V specialty chain Sixth Avenue Electronics has been ordered to cease operations under a temporary restraining order issued over the weekend by a U.S. District Court in New Jersey.The action was brought by GE Commercial Distribution Finance Corp. (CDF), which said the privately-held dealer had defaulted on a floor-planning loan and was disposing of its remaining inventory without repaying its debts.
"If the borrower's actions continue, the remaining collateral may be dissipated, concealed, or sold to innocent third parties," CDF said in court papers.
Sixth Avenue was also ordered to post a $24 million bond and to appear at a hearing in Newark, N.J., on Wednesday.
Pending a liquidation agreement between the two parties, the court could allow CDF to seize Sixth Avenue's estimated $12 million in remaining inventory, along with equipment and fixtures.
Calls to Sixth Avenue's senior management were not returned, and longtime company spokesman, operations VP Tom Galanis, left the business last month after 23 years with the chain.
According to court documents, the retailer missed a $2 million payment on Sept. 12 and voluntarily surrendered some of its inventory to the GE division on Sept. 21 to help cover an outstanding balance of $6.7 million in principal and interest.
CDF similarly sought seizure of Sixth Avenue's assets in March following a previous loan default. The crisis was averted after the retailer made "a significant payment and other concessions," court papers show, aided by an outside investor who acquired a 33-percent stake in the business.
Sixth Avenue never identified its non-operating partner, although GE sent default notices to Albert Houllou, a principal of Broadway Photo and numerous CE e-commerce sites, in addition to members of the founding Temiz family.
The 27-year-old chain, which was forced to close 16 of its 19 stores this year, was also sued by Toshiba America Information Systems on Sept. 30 for $1.2 million in unpaid purchases.
Talkback
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Great they are out ,that made P.C.Richards happy ,when you go into their locations they talk down to you when you ask them for a better price ,another company that sells repacks like J&R and all local tri state companies ,it is an industry standard ,i worked for a bunch of them they all do it.Dirty business where the average consumer which is probably 50% of consumers are happy buying from the costco and Bjs of the world and do not care about quality,oh i forgot the internet where you think you are the smartest guy on the planet because you saved 20% or 30% on product and meanwhile the ups guy or fedex guy throw around your purchase like it is paper ,if you have any doubts check on youtube ,so so funny.
turkiller - 2012-8-1 20:19:13 EST -
Like Sixth Ave. or not, it is not illegal to sell below MSRP. Manufacturers can enforce MAP only, but part of a free economy means retailers can set their own prices. The recourse for manufacturers and distributors is not to sell to the retailer, which is always their free choice to make. God Bless America!
Phillip Slepian - 2011-5-12 15:54:28 EST -
The story of 6Ave is not one of business practices perhaps shared by others, but of questionable business practices, misrepresentations to employees and customers alike, bad management decisions, over-zealous ambition and expansion...and, when things went bad, refusing (and lying) to employees, creditors and the press.
Selling below MSRP? Sure, it's done all the time, but not for products from companies that vehemently defend and demand unilateral pricing.
Grey market? Sure, companies do that. But does that excuse 6Ave? Are they still not wrong?
What about re-packs? What about confusing return policies?
Did a lot of customers get great deals? Yes. Did sales people make good commissions? Yes.
But, when things turned bad - the company abandoned the customers and employees who built their success. They revealed themselves and their business practices and abandoned those who might have worked with them to continue and thrive.
Now, with the total demise of their 27 year business in serious jeopardy, the miss loan payments, sell off inventory to line their own pockets and, until today, mislead the press.
Game over.
Howie Home Theater - 2011-10-10 22:24:17 EDT -
This may be a terrible company, but there's nothing wrong with selling goods below MSRP. In fact, I wouldn't buy from a store that didn't sell below MSRP.
And while selling grey market goods is debatable, other supposedly legitimate stores do so as well. B&H, for example, sells grey market Nikon lenses, although they don't sell grey market bodies.
ZoetMB - 2011-10-10 19:39:55 EDT -
Could't have happened to a nicer company!
These guys have been a PLAGUE on the CE industry since they opened their doors! They ROUTINELY sell goods below MSRP, and deal quite a bit in "grey market" goods...goods that have restricted distribution and are not meant to be sold online. They undercut legitimate dealers and make it IMPOSSIBLE to build value in a brand. Good riddance...I hope everyone involved goes bankrupt!
John Nemesh - 2011-10-10 16:55:24 EDT
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