Several suppliers that sold directly to Ultimate Electronics—which is closing its doors –estimated the chain’s annual sales in car electronics at about $10 million in 2009 and less in 2010.
Most suppliers we contacted said the amount of money owed to them is not onerous . The court will likely reveal a final tally of debts in 45 to 60 days, said one vendor.
Car electronics suppliers to Ultimate include Kenwood, Alpine, Rockford Fosgate, JVC, Focal, Directed Electronics, Escort, Garmin, TomTom and Magellan.
The bankruptcy and store closings of the Thornton, CO-based chain, came as a surprise to most industry members. Suppliers said the company expanded too rapidly into new markets. In some instances, it opened only a few stores in areas where advertising rates are costly. The rule of thumb is to open 10 stores in a metropolis to optimize ad spending.
Local stores minimized the impact that Ultimate’s liquidation sales would have on their location, as the chain mainly advertised sales of TVs and appliances. Ultimate competed in some markets with Car Toys of Seattle and Audio Express.
Car Toys’ Jim Warren said, “We share a number of markets with Ultimate and stand ready to meet the needs of their customer both for the short and long-term. Ultimate had a long and rich history in the markets it served – we’re sorry for the many fine employees who worked there.”
Ultimate filed for Chapter 11 on January 26 in the U.S. Bankruptcy Court in Delaware, where the store’s parent company Ultimate Acquisitions is incorporated. At the time it said it owed creditors between $100 and $500 million—the same rough amount of its assets.
A week later it asked the court for permission to liquidate.
The chain’s largest debtor is GE Capital, which is owed $64.8 million.
The court is expected to hold a hearing Friday to approve the liquidation sale to start no later than February 12 and to finish no later than April 15, said Syracuse Online citing court documents.
Ultimate Electronics employs about 1,500 people. It operates stores in states including, CO, OR, NE, AZ, NM, OK, KS, MO, TX, MA, NY, PA, MI, MN.
STLtoday.com reported a manager of a St. Louis store said Ultimate stores are currently accepting gift cards and extended warranties will continue to be honored either by a third-party warranty company or through the manufacturer.
Ultimate previously filed for Chapter 11 bankruptcy in 2005.