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.
