Muzak Files Chapter 11 to Refinance Debt

NYT
February 11, 2009
Muzak Files Chapter 11 to Refinance Debt
By THE ASSOCIATED PRESS

Muzak Holdings, the maker of background music heard in elevators, filed for Chapter 11 bankruptcy protection on Tuesday.

The company had a heavy debt load, and it filed to try to refinance some of its debt. In a court filing, the company listed its total debt at $100 million to $500 million.

The filing listed assets of less than $50,000, but a company spokeswoman, Meaghan Repko, said total assets were about $320 million. That included the Muzak operating company, she said, which also filed for bankruptcy. She declined to provide a more exact figure for the company’s total debt.

Many of Muzak’s biggest creditors are music companies that license songs for use on Muzak playlists. While the company is known as the creator of elevator music, its business is now more focused on creating playlists for use in retail stores, installing professional sound systems and providing other services.

Muzak, which is based in Fort Mill, S.C., filed for protection in the United States Bankruptcy Court in the District of Delaware in Wilmington.

The company expects to continue to operate. A statement said it had “sufficient means” to support itself through a bankruptcy reorganization.

Among its biggest unsecured creditors is U.S. Bank, which is owed $371 million according to a court filing.

The American Society of Composers, Authors and Publishers is owed $213,020, the filing said.

Other top unsecured creditors include vendors like Universal Music Enterprises, owed $349,321; EMI Capital Records, $320,323; AT&T, $257,384; and Dish Network, $251,276.

Sony Music, BMG Film and Television Music, United Parcel Service and Virgin Records were also listed among the unsecured creditors.

Kirkland & Ellis was hired as the company’s bankruptcy law firm. Moelis & Company will serve as the financial adviser.