It has not been a good July for Brook Mays Music Co. A week ago, news broke that the Dallas-based institution, which has sold or leased a musical instrument to pretty much every kid in the area who wanted one since 1901, had paid $16.7 million to a Boston-based musical instrument company called First Act. The settlement stemmed from litigation in which First Act claimed, and proved, that Brook Mays had instigated a smear campaign against the company for making "a false statement of fact that disparaged" First Act's products to school band directors.
Then, just this Tuesday, Brook Mays filed for Chapter 11 protection with the U.S. Bankruptcy Court for the Northern District of Texas in Dallas. According to court documents, Brook Mays owes $41 million on a loan it took out from JP Morgan Chase Bank to pay back the likes of Yamaha Corp. of America (to which Brook Mays owes $6,471,111), Conn-Selmer Inc. ($4,990,751), Roland Corp. US ($1,777,582), Kawai America Corp. ($1,587,690) and others. That means, according to The Daily Deal (in a story not yet online), that Brook Mays will have to auction itself off with the court's supervision, and though no formal date's been given yet, the auction will likely take place next month. And how did this happen to the Dallas mainstay with 62 stores in eight states and annual revenue of some $150 mil? Says The Deal:
"Brook Mays' problems began earlier this year when lower-than-expected revenue in its two most important quarters, the third and fourth, caused the company to default on its credit facility with J.P. Morgan.
The debtor said the two quarters are usually strong for them because they are tied to the start of the school year and winter holidays, when music sales are generally up."
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