One-Stop, Retailer Face Chapter 11 Bankruptcy Woes

Universal One-Stop has filed for Chapter 11 bankruptcy protection, and retailer CD World is said to be on the brink of filing as well.

Philadelphia-based Universal One-Stop, one of the oldest one-stops in the U.S., filed on Thursday. The operation was in technical default of its revolving credit facility and couldn't reach an agreement with its bank, Wachovia, about restructuring the terms of the loan, according to Harold Lipsius, the one-stop's founder, owner, and president. A loan covenant had required Universal One-Stop to maintain a net worth of $6 million; however, it had fallen to about $5.75 million, Lipsius reports.

Universal One-Stop had sales last year of about $35 million and losses of about $250,000, according to Lipsius. In 2001, it had sales of $41 million and losses of $500,000, sources say.

As for South Plainfield, N.J.-based CD World, sources say the chain has been paying cash on delivery since February, and is likely to file for Chapter 11 in order to terminate leases for shuttered stores. The chain, which merged with Streetside Records last summer, has shut five of its 19 stores this year.

Lipsius says he wants to re-organize and keep Universal One-Stop in operation; sources suggest CD World has the same goal.