Sam Ash Music files for bankruptcy protection as buyers sought for Hicksville-based retailer

Sam Ash Music Stores has filed for bankruptcy protection as it conducts store-closing sales, but the iconic music equipment retailer is seeking a buyer in hopes of saving stores and employees’ jobs, a top executive said.

“It’s business as usual. Stores are open. Website is open. And we’re in talks with a number, many, almost 70 different entities that are interested in buying all or parts of the company,” said Richard Ash, co-chief executive and grandson of the business’ founder.

The largest chain of family-owned musical instrument stores in the country, Sam Ash Music Corp. and its affiliates filed for Chapter 11 bankruptcy protection Wednesday in the U.S. Bankruptcy Court for the District of New Jersey.

The retailer has between $100,000,001 and $500 million in estimated assets and the same range in estimated liabilities, according to a bankruptcy court filing.

Sam Ash sells musical instruments and accessories online and at 42 stores in 16 states, including one store in Carle Place, and it has four distribution centers in Hicksville, Indianapolis, Las Vegas and Tampa, Florida. The company employs 830 people, 671 of whom are full-time workers, according to the bankruptcy filing.

Sam Ash's court filing shows it defaulted on a loan agreement with Tiger Finance for $18 million by not meeting deadlines for “showing progress toward a sale of the business or refinancing," said bankruptcy attorney Patrick Collins, a partner at Uniondale law firm Farrell Fritz PC, who is not involved in the Sam Ash bankruptcy case. Tiger Finance had been forbearing from enforcing the defaults, but the forbearance period expired May 8, he said.

Sam Ash has entered into a “stalking horse” asset purchase agreement with Tiger Finance, which has proposed to buy Sam Ash’s assets, but not to keep the store s open, said Sam Ash’s chief restructuring officer, Jordan Meyers, who is a managing director at SierraConstellation Partners LLC, a Los Angeles-based interim management and advisory firm.

A stalking horse bid sets the floor price for assets in a bankruptcy.

But the preferred plan for Sam Ash is to sell the company to a buyer that would continue to operate the business "as a going concern," Meyers said.

Tiger Finance has agreed to lend Sam Ash up to $20 million to keep the business afloat until the purchase agreement closes.

Tiger Group, an affiliate of Tiger Finance, and Gordon Brothers are overseeing the store closing sales, according to Sam Ash.

Changing course

Sam Ash’s bankruptcy filing comes several weeks after the company said it was only closing 17 or 18 stores this year, which also marks the retailer’s 100th anniversary.

However, last week, Sam Ash posted on its social media pages that all its stores were having going-out-of-business sales and, on April 24, the retailer filed a notice with the New York State Department of Labor saying that 118 workers would be laid off at its Hicksville headquarters, distribution and manufacturing site because the business was being sold.

So far, two stores have closed — one in Huntington Station in March and one Edison, New Jersey, in April.

Sam Ash has hired investment banking firm, Capstone Partners, to gauge market interest in acquiring some of the retailer’s stores, as well as its e-commerce and Samson Technologies Corp. wholesale businesses.

Sam Ash has faced financial challenges over the past several years that were exacerbated by the COVID-19 pandemic, Meyers wrote in a bankruptcy court filing.

Sam Ash and its affiliates’ “business operations, like those of many of their peers in the retail industry, have been negatively impacted by adverse market conditions, including, most notably, the COVID-19 pandemic. The debtors lost significant market share when customers converted to online shopping, and they could not regain that share post-pandemic,” Meyers wrote.

Sam Ash hired SierraConstellation  Partners in November to help with turning around the business, including closing unprofitable stores and growing its Samson Technologies Corp. wholesale business and online business, Meyers wrote.

Sam Ash initially planned to close about 15 unprofitable stores but the landlords would not allow the company to get out of the leases, Richard Ash told Newsday.

Due to insufficient liquidity, Sam Ash did not pay rent on most of its stores in April and May 2024, and the company significantly reduced payments to most of its vendors, some of which suspended deliveries of merchandise, according to a court filing.

The lack of a continuous flow of inventory affected store and online sales.

Filing for bankruptcy provided protections to prevent landlords from pursuing eviction proceedings or attempting to seize the stores’ inventory to satisfy rents due, Meyers wrote in the bankruptcy filing.

By Tory N. Parrish

tory.parrish@newsday.com@ToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.