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Familiar name in the music industry files for bankruptcy

The music industry thrives on change. From new sounds of Elvis in the 1950's to grunge music in the 1990's, innovation and change are constant aspects of the music business. Recently there have also been major changes for a music supplier who has filed for Chapter 11 bankruptcy.

Filmed Entertainment, Inc., parent company of the Columbia House DVD and music clubs, filed for bankruptcy protection in New York. The company intends to sell the DVD Club business through a bankruptcy auction. The Columbia House DVD club is known for selling movies and television series directly to customers. Florida residents may remember a deal the now-defunct music club offered in which members could obtain eight CDs for one cent.

The Columbia House clubs have struggled over the years, and the company's filing for Chapter 11 bankruptcy follows almost two decades of declining sales. They have been affected by innovations in the music industry that include Napster in the late 1990s, as well as iTunes. There has also been competition in the DVD arena from competitors such as Netflix, as well as developments that have allowed consumers to stream media. The music club closed in 2010, with the DVD club remaining open until the present time.

This business bankruptcy seeks to offer a fresh opportunity for the company to sell what remains of the business and resolve some outstanding debts. They are seeking permission to continue operations while supporting the business with cash during the ongoing proceeding while potential buyers are identified. Columbia House currently has no employees that will be affected by this filing, but the Chapter 11 bankruptcy will offer an opportunity to rectify the disparity in the company's $63 million in liabilities as compared to $2 million in assets.

Though choosing to pursue a bankruptcy may not be an easy decision, it can be the best decision for a business to reorganize and have a better chance at surviving in the future. Florida residents who have been members and fans of the Columbia House DVD and music clubs over the years will likely hope that is the case for this business.

Source: wbay.com, "Parent of Columbia House files for bankruptcy protection," Marley Jay, Aug. 11, 2015

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