A BELOVED electronics retailer has filed for bankruptcy and is set to sell 35 of its stores.
Execs took the decision to file for bankruptcy after grappling with a downturn in sales and rising debts.
There are 48 Car Toys stores across the country but bosses intend to sell 35 locations as part of a major restructuring, as per The Seattle Times.
Shoppers could buy accessories for their motors, including speakers and amplifiers.
And the brand has locations in several states, including Washington, Oregon, Colorado, and Texas.
Bosses have said the bankruptcy filing is a necessary step for the future of the business.
Chiefs are also ending its gift card program immediately.
The company’s Groupon program has also come to an end.
Court papers, seen by The Seattle Times, have documented the company’s recent struggles.
Revenue has dropped from $113 million, which was seen in 2023, to just over $52 million this year.
And, bosses have been forced to take out loans to cover the company’s losses.
The stores that are being sold will be divided among different groups.
Outlets are being sold to staffers and rival retailers.
One company, Foss Audio and Tint, is set to buy six stores in Colorado and eight locations in Washington state.
Bosses at Aspen Sound, a firm that also provides car stereo fitting services, are buying two stores in Washington.
But, two staffers are buying 12 outlets in Texas.
And, another duo are purchasing five stores across Oregon.
More than 170 staffers are set to be impacted by the bankruptcy process.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can't repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
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