Plan 9 Music, a fixture in Carytown for 30 years, has filed for Chapter 11 bankruptcy protection after battling to stay in business in the face of changing consumer habits and the economic downturn.
The record store company filed Monday in Richmond. By opting for Chapter 11, Plan 9 plans to restructure its finances and continue operating.
"We have been fighting for a long time. I was trying to avoid this," James "Jim" Bland, Plan 9's owner said Wednesday. "I've been trying to pay everyone here and there, but it's a burden to doing business."
The store will remain open while it attempts to restructure.
According to court filings, the company has less than $50,000 in assets and between $1 million and $10 million in liabilities.
A copy of the company's balance sheet that was filed with the court shows that its cash and cash equivalent was a negative $99,673.63. A letter filed with balance sheet states that it "appears to contain entries which will need correction" though it doesn't state what is incorrect.
Among Plan 9's highest debts is $232,267.54 owed to fellow Carytown merchant World of Mirth. Bland is 50 percent owner of the popular toy store.
The amount of that debt and others could change in subsequent filings, Bland said.
Among the top debtors is Bland himself who has lent the company more than $431,000.
Plan 9 opened in Carytown in 1981. It has been at its current 6,300-square-foot location since 1997.
Over the years, the company grew to seven stores.
But the past several years have been difficult as consumers changed how they bought music, turning to the Internet to buy and download songs, and then the economy tanked.
David Urban, a professor of marketing and executive associate dean at Virginia Commonwealth University's business school, said stores like Plan 9 have lost customers as music-buying habits have changed.
"Consumers used to be forced to buy CDs, and before that, cassette tapes, 8-track tapes, LP vinyl records, and 45 rpm singles. Now, people download their music to their iPods and other devices. If they don't want every song on a particular artist's album, they download individual songs," he said. "For stores like Plan 9, it means their target audience has shrunk."
Bland said: "For quite some time we've been dealing with changes in how [people buy music]. All those issues [were exacerbated] in 2007 when the economy turned."
Since 2009, the company closed all but two of its stores. It has laid off about 20 employees in the past couple of years, Bland said.
"It was one of the great record stores in the country," said Jay Leavitt, who left Plan 9 2 ½ years ago to start his own shop, Deep Groove Records on Robinson Street.
He worked at Plan 9 for 16 years, starting as part-time worker and working his way up to general manager.
"I feel bad for them. Jim was always good to me," he said, adding that vinyl records are making a comeback, but it's a niche market.
"It's like, to me, a monument in the city falling down," City Councilman Charles R. Samuels said.
To stay viable, Plan 9 has been looking to move out of its Carytown flagship store into a smaller space, preferably close by.
"We're in a place that's too big and expensive. We need to find a smaller space," he said.
Bland said the bankruptcy will help him restructure his debts and come out stronger.
"This is a way to pay my debts and stay in business."
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