This is one bankruptcy that Riverside County residents may be ambivalent about, depending on their taste in music. Musak, whose music fills elevators and “on hold” messages for phone systems, is filing for Chapter 11 bankruptcy. Apparently, the global economic crisis that has led many Riverside County residents to seek a bankruptcy attorney is not the culprit this time. Musak’s CEO said that debt from a decade ago is the true source of their need to file for bankruptcy protection.
From CNN online:
“Muzak, the company that put pop, string-filled arrangements of rock songs in your elevator, filed bankruptcy papers Tuesday after it missed a $105 million payment to creditors.
The pipeline of easy listening will continue to flow as Muzak restructures its debt during the Chapter 11 process, the company said.
“Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago,” Muzak CEO Stephen Villa said.
Muzak’s cash flows doubled in the last three years, Villa said, “demonstrating that our business continues to perform well even in today’s challenging environment.”
Along with its ubiquitous elevator offerings, Muzak and its 14 affiliates — all privately owned — produce on-hold messages and install sound systems, digital signs and drive-thru systems for retail businesses.
Bankruptcy documents showed Muzak owes its largest creditor — U.S. Bank, as indentured trustee — about $370 million, nearly all of it due this year.
Muzak spokeswoman Meaghan Repko said the filing was voluntary and in cooperation with the creditors.
The weakened global economy was not a factor, she said, noting the company’s profits have been rising in recent years.
The Chapter 11 protections will allow Muzak time to restructure the debt, which was incurred a decade ago, she said.”
Riverside County, with cities such as Corona and Riverside that abound with commercial buildings and offices, has many elevators and phones that have been using Musak for years.
