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Muzak, the company that has punished elevator users for over 75 years with their hideous “music” renditions, has filed for chapter 11 bankruptcy protection.
According to Bloomberg.com, Muzak filed for bankruptcy this week with credit problems of $465.3 million, but listed assets of only $324.2 million. The problem is that the company pushed a lot of their debt to mature in the early part of 2009 seeing as they were relying on a merger or sale of the company to help them control the debt. Now that neither has happened, the company was left with only the option of filing for chapter 11 reorganization.
According to TheStreet.com, this is a list of how some of their debt breaks down.
How in the world do they owe U.S. Bank $371 million? What were they taking out loans for that would amount to anything close to that? The music companies aren’t surprising since they have to pay out royalties for all of the music they play, but in general this is a company that sends out music and nothing else. I know in the old days they were sent out by tape, but I would imagine in this day and age they transmit their products by satellite to the elevators. What is even more frightening is that their list of secured creditors has yet to be released, so this is possibly only the tip of the iceberg.
While there are so many saddening stories right now of companies cutting jobs or going out of business, this is one that just leaves my head spinning. How could a company with such a simple concept be so badly mismanaged? And how could a bank, one I happen to have accounts with, allow a company to have $371 million dollars in unsecured loans? What was that money going to?
I feel sorry for the companies owed money… okay, not really, my feelings towards the music industry machine aren’t really a secret, but I do feel sorry for the artists. Hopefully they will be able to get the debt problem settled, and get the money out to those they owe. If not, think of how much more pleasant a ride in the elevator will be next time when there isn’t some overly jazzed up version of The Beatles “Hey Jude” playing in the background.