Phil & Jim’s Chain Gives Up on Reorganization Effort : Retailers: Electronics dealer agrees to sell all assets. The news stuns ex-employees, customers at hearing.

The troubled Phil & Jim’s electronics and appliance store chain has agreed to sell its remaining assets, ending a three-month bid to reorganize its finances under the protection of U.S. Bankruptcy Court.

The agreement, approved earlier this week by Phil & Jim’s three major creditors, stunned the dozen or so former employees and customers who were in bankruptcy Judge John Wilson’s Santa Ana courtroom for a related hearing Wednesday morning.

The 40-year-old private company filed for Chapter 11 bankruptcy protection on Jan. 13, listing 120,000 creditors, including thousands of customers who had purchased extended product warranties.

Maytag Corp., Whirlpool and General Electric Credit Corp., the retail chain’s three largest secured creditors, approved the liquidation plan earlier this week. The three are owed about $8.7 million. Other creditors, including those who purchased warranties, are owed about $5 million.

The Anaheim-based company listed $7.1 million in assets in recent bankruptcy filings. Phil & Jim’s closed its five remaining stores in January shortly before a going-out-of-business sale.

According to the agreement, Phil & Jim’s will abandon its attempted business reorganization and start selling its remaining assets by June 7. Wilson told creditors that they would likely receive notices of the Chapter 7 liquidation within two months.

Attorneys for Phil & Jim’s and the court-appointed creditors committee did not appear before Wilson during Wednesday’s hearings and did not return telephone calls Wednesday afternoon.

It is unclear how the agreement between Phil & Jim’s and its larger creditors will affect an estimated 100 former employees who evidently are owed back wages and vacation pay. Employees at Wednesday’s hearing also said they were concerned about funds the chain supposedly put into their profit-sharing plans.

“I guess all we can do now is wait,” one disgruntled employee said after the meeting. The employee, who worked for Phil & Jim’s for more than a decade, said she’s been unable to determine whether she’ll recover her portion of the company-sponsored profit-sharing plan. Another longtime employee, who also asked not to be identified, said she was owed several weeks of back pay and vacation compensation.

Wilson told employees that their wage claims ranked high on the priority list among creditors.