GE Capital has cut its credit to Sixth Avenue Electronics and has gone to federal court to collect $9.6 million in past-due payments.
The complaint, filed in the U.S. District Court in Wilmington, Del., charges that Sixth Avenue defaulted on a $6.4 million payment to GE Capital's Commercial Distribution Finance arm (CDF), which has provided the chain with inventory financing since 2007.
CDF is seeking possession of inventory and collateral and has suspended the retailer's credit facility, court documents show.
Sixth Avenue could not comment on the litigation.
The New Jersey-based A/V chain began a multi-state build-out in 2009 that carried it into Philadelphia and Delaware, giving it 19 stores at its peak.
But since last month the privately held company has closed eight locations -- including one today in West Paterson, N.J. -- and plans to shut a ninth and final store, in Livingston, N.J., tomorrow.
Operations VP Tom Galanis said many of the closures reflect the chain's decision to exit the major appliance business, rendering larger locations, some with as much as 35,000 square feet, redundant.
Instead, Sixth Avenue plans to relocate several stores, including the one in West Paterson, to smaller, 10,000-square-foot showrooms, Galanis said.