Musicland requests court approval to repay up to $26 million to secured trade debt holders

By Jennifer Lanning Drey

Eugene, Ore., July 24 - Musicland Holding Corp. requested court approval to repay up to $26 million of the principal amount due to the holders of its secured trade debt, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, Musicland estimates that it owes $170 million to $173 million of secured trade debt.

The company said as a result of a sale involving Trans World Entertainment Corp. and other income-producing activities, it now has approximately $46 million in excess cash.

Musicland said in the filing that it has completed an initial analysis of claims and believes the proposed $26 million payment will not compromise the company's ability to pay, if required, the total amount of priority claims.

A hearing has been scheduled for Aug. 10.

Musicland, a Minnetonka, Minn., specialty retailer of pre-recorded entertainment software products, filed for bankruptcy on Jan. 12. Its Chapter 11 case number is 06-10064.

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