SPRINGFIELD, N.J. –
Troubled A/V specialty
chain Sixth Avenue Electronics agreed last week
to relinquish its inventory to GE Capital Solutions
after defaulting on a floor-planning loan for the second
time in sixth months.
The action effectively ends the 27-year run of
Sixth Avenue, which was one of the last remaining
independent CE chains in the New York metro
market.
The privately held dealer consented to GE’s motion
before a U.S. District Court judge in Newark
to seize some $12 million in inventory, along with
equipment and fixtures.
The court shut down operations on Oct. 8 under
a temporary restraining order after GE’s commercial
distribution finance unit (CDF) argued that
Sixth Avenue was disposing of 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 documents
obtained by TWICE.
The company had, in recent weeks, been holding
steep, liquidation-like promotions promising upwards
of 70 percent-off premium A/V merchandise.
Calls to Sixth Avenue president Mike Temiz and
chief financial officer Sevan Semerciyan were not
returned, and operations VP and de facto spokesman
Tom Galanis left the business in September
after 23 years with the chain.
Sixth Avenue triggered the loan’s default covenants
on Sept. 12 by missing a $2 million payment.
It later surrendered some of its inventory to CDF to
help cover an outstanding balance of $6.7 million in
principal and interest, court filings show.
GE 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,” CDF
said, 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.
Pending a liquidation agreement between the two
parties, the court is expected to authorize the U.S.
Marshall and local sheriffs’ offices to seize property
at Sixth Avenue’s three remaining stores, including
its headquarters location here, and at a warehouse in
Somerset, N.J. Its website was still up last week although
its e-commerce function was disabled.
Sixth Avenue was also sued by Toshiba America Information
Systems for $1.2 million on Sept. 30 and by
TiVo for about $200,000 on Oct. 12, both for unpaid
invoices.
