Sixth Avenue Electronics Negotiating Settlement With GE Lenders

Sixth Avenue Electronics and lender GE Commercial Distribution Finance are negotiating a possible settlement that could throw a life line to the struggling New Jersey retailer, vendor sources familiar with the discussions said.

Any settlement agreement presumably would head off a hearing scheduled for Thursday in U.S. District Court, Newark, N.J., on GE’s motion to seize inventory from Sixth Avenue. GE sued Sixth Avenue earlier this month after the retailer defaulted on a $6.37 million payment in February. Sixth Avenue is holding $5.5 million in inventory as part of a four-year-old financing agreement with GE, GE has said.

Since GE sued Sixth Avenue for breach of contract on March 14, some vendors have withheld inventory shipments until the dispute is settled, executives at several CE suppliers said. A GE spokesman declined to comment. Sixth Avenue Chief Operating Officer Thomas Galanis wasn’t available for comment Wednesday. GE sent Sixth Avenue a proposal to restructure the debt before filing suit (CED March 22 p3), but the chain hadn’t responded by March 11. Sixth Avenue left the Philadelphia market earlier this year, ending a two-year run and shrunk the chain to nine stores from a peak of 19. Some vendors said they expected to resume shipments to Sixth Avenue in April if there’s a settlement.

"We have a sense of optimism that this will work out and that GE and Sixth Avenue will be able to reach an agreement on financing,” said one CE supplier executive. “This is not another Ultimate Electronics,” he said referring to a Colorado-based retailer that is liquidating. Another supplier executive said that Sixth Avenue’s “tone has been that they were trying to work something out.” With Sixth Avenue owning many of the remaining store locations, the chain will focus on smaller stores and look to “return to their roots as a specialty retailer,” said yet another.