Rogersound Labs Seeks Bankruptcy Protection : Retailing: The owners were unable to service the debt they took out to buy the consumer electronics firm in 1989.
Rogersound Labs, whose owners were burdened by debt acquired when they bought the local audio and video retail chain, has filed for Chapter 11 protection from creditors, becoming the latest casualty in the consumer electronics industry.
The Canoga Park-based Rogersound, founded in 1971 by Howard Rogers, was sold to a group of investors in 1989 for an undisclosed price. The private firm, which filed for protection from creditors on Monday in U.S. Bankruptcy Court in Los Angeles, is controlled by a holding company called RS Labs.
“While (Rogersound Labs) has performed operationally, its heavy debt burden has affected its credit--especially since the start of the recession,” the company said.
Rogersound has 11 locations--all in Los Angeles and Orange counties. The company said it plans to continue its sales operations and to maintain production at its loudspeaker manufacturing facility in Canoga Park.
As it prepares to file a reorganization plan, Rogersound is searching for investors who may want to purchase part or all of the company, said Fred Roberts, president of F. M. Roberts & Co., a Los Angeles-based investment banker hired by the retailer.
Rogersound has assets of about $27 million and liabilities of about $26.1 million, according to the bankruptcy filing.
Among the creditors with secured debt--those whose loans are backed by collateral--is HomeFed Bank, which has provided Rogersound with about $18 million in working capital, said Joseph Eisenberg, the lawyer who filed the bankruptcy petition.
Among major unsecured creditors are Cypress-based Mitsubishi Electronics, which is owed $490,220, and Proton, a Cypress-based distributor of consumer electronics that is owed $102,679.
Rogersound had sales of $59 million in the fiscal year ended July 31, 1991, compared to sales of $63 million the previous fiscal year. The chain served the higher end of the consumer electronics market.
Consumer electronics retailing has been seen consolidation nationwide. Competition from superstores, including Richmond, Va.-based Circuit City, has sent a number of regional chains into bankruptcy or out of business.