LOS ANGELES -- Peaches Records & Tapes, a Los Angeles-based record chain, has filed a petition for bankruptcy citing $20 million in debts for its 35 stores coast to coast.
'We were undercapitalized,' Neil Heiman, executive vice president of the parent company, Nehi Record Distributing Corp., said.
The record industry has suffered for the past two years because of heavy competition from tapes and the growing video business.
The company filed under Chapter 11 Wednesday in federal bankruptcy court seeking protection from creditors.
Peaches closed a store in Hollywood last year and still operates 35 stores from Seattle, Wash. to Florida.
Sales for the fiscal year ending this month should total $51 million with a $500,000 profit, which is not enough, Heiman said.
Heiman said his brother, Tom, owns 95 percent of the Peaches stock and hopes to find a buyer.
Major creditors include Citibank and six major record distributors, Heiman said.