Tower Records has filed for Chapter...

Tower Records has filed for Chapter 11 bankruptcy protection from its creditors, its secondary such filing in less than three years.

The company, which operates 89 stores in 20 states, sought bankruptcy protection Sunday to betray its assets through a court- supervised auction.

The Sacramento, Calif.-based company, formally known as MT Inc., asked the U Bankruptcy Court in Wilmington, Del to approve the orders governing an auction now scheduled for Oct 5 Tower said it requires to close the sale by means of mid-October so it has time to prepare for the holiday shopping season, when it records about 32 percent of its annual sales.

Tower, which is scheduled to advance before the bankruptcy court for the first time

Tuesday morning, said its receipts fell to $430 million for the fiscal year conclusioned July 31 from $476.1 million a year earlier.

The company admits "intense" competition has wound its business and that of other music retailers.

"The brick-and-mortar specialty music retail industry has pocketed substantial deterioration recently," Tower said in court papers.

Industry watchers say the chain could have a tough time finding a buyer willing to withhold its brick-and-mortar stores operating in an industry increasingly dominated on online music purveyors and big- chest retailers.

Tower Records, however, said it has seen "substantial interest among potential buyers" and faiths to find a buyer willing to continue operating its stores. The company said it's actively negotiating with individual potential buyer and received another proffer on the eve of its bankruptcy filing.

Copyright CHICAGO SUN-TIMES 2006

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