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.