December 5, 2008 / 9:09 PM / 11 years ago

UPDATE 1-U.S. court OKs Tweeter Chapter 7 liquidation

(Adds name of Trustee for liquidation)

NEW YORK, Dec 5 (Reuters) - U.S. electronics retailer Tweeter received approval from a U.S. bankruptcy judge to liquidate its business under Chapter 7, according to court documents on Friday.

Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware ordered the conversion from Chapter 11, according to the documents.

The company abruptly closed all of its stores this week, just days before its going-out-of business sales were to conclude.

The court named George Miller, of accounting firm Miller Coffey Tate, as the interim trustee to oversee the liquidation, according to the court documents.

Tweeter had asked for the Chapter 7 conversion, saying it could not obtain the funds to keep running the closing sales. In court documents, the company said it had closed all its stores and fired its employees, beginning on Monday.

The liquidators retained to help run Tweeter’s store closings said in court documents they were told on Monday the company was ending its store-closing sales and that Tweeter had not opened any locations on Tuesday.

The liquidators, SB Capital Group, Tiger Capital Group and Hudson Capital Partners, said they estimate roughly $15 million of inventory, furniture and fixtures are in the locked stores.

The chain employed about 1,150 workers when it filed for bankruptcy in November and, as is typical with going-out-of- business sales, many had been promised bonuses and other compensation to stay with the company through the store closings.

The case was the second Chapter 11 filing for Tweeter in two years. Tweeter Home Entertainment Group Inc, a former publicly traded company, filed for bankruptcy protection in June 2007 and was later bought out by Schultze Asset Management. The Schultze-run stores filed the new Chapter 11 case in November. (Reporting by Caroline Humer; Additional reporting by Emily Chasan; Editing by Andre Grenon and Carol Bishopric)

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