Sam Ash Music Corporation, the century-old family-owned musical instrument and pro-audio retailer, is in the post-effective-date phase of a confirmed Chapter 11 liquidation, having wound down its 42-store retail footprint through going-concern and store-closing sales and transferred remaining causes of action and reserves to a liquidating trust. The case moved from petition to plan effectiveness in under four months.
The debtors — Sam Ash Music Corporation, its affiliated regional store entities, and wholesale subsidiary Samson Technologies Corporation — filed voluntary Chapter 11 petitions on May 8, 2024Dkt. 1 in the District of New Jersey before Judge Stacey L. Meisel. The filing followed a May 2, 2024 announcement that all 42 retail locations would close, and was precipitated by an over-advance position under the prepetition Tiger Finance asset-based lending facility, less than $1 million of cash on hand, and sustained pressure from e-commerce competition and declining retail traffic, as detailed in the first-day declaration of Chief Restructuring Officer Jordan MeyersDkt. 16 and the accompanying CRO petition declarationDkt. 17.
To stabilize liquidity, the debtors sought combined DIP financing and cash-collateral authority at the outsetDkt. 15, and the court entered a final order on June 5, 2024Dkt. 203 authorizing up to $20 million of postpetition financing, priming liens, superpriority administrative claims, and use of cash collateral. The DIP package was later modified by July 2024 stipulations that resolved the Official Committee of Unsecured Creditors' challenge rights, reduced outstanding DIP obligations, waived the exit and breakup fees, and extended the DIP sale-closing milestone.
The restructuring path paired an accelerated section 363 sale of the e-commerce and wholesale (Samson Technologies) assets with store-by-store liquidation of the retail estate, followed by a liquidating plan. The debtors moved quickly to a disclosure statement on May 31, 2024Dkt. 144 and filed the Plan Supplement on July 24, 2024Dkt. 392, which established a Liquidating Trust governed by New Jersey law with Emerald Capital Advisors as Liquidating Trustee, funded with approximately $4 million in wind-down and expense reserves, capping trustee compensation at $20,000 per month plus a 6% commission on retained-cause recoveries, and defaulting all executory contracts and unexpired leases to rejection except those identified for assumption.
The Second Amended Joint Plan of Liquidation, filed August 8, 2024Dkt. 438, structured recovery into seven classes: secured tax, other secured, and other priority claims unimpaired; general unsecured claims — the impaired, voting class — receiving pro rata shares of net distributable proceeds; and intercompany claims, subordinated claims, and equity interests receiving no distribution. The plan was confirmed in August 2024 and became effective that same month. With roughly $12.8 million in allowed general unsecured claims across 30 claimants and one secured claim, the case is now administering distributions through the liquidating trust, which carries a maximum five-year term and ongoing quarterly reporting obligations to the bankruptcy court and the U.S. Trustee.
