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Muzak files for bankruptcy

  • Story Highlights
  • Muzak creates musical material often called "elevator music"
  • Company missed $105 million payment to creditors
  • Cash flow is up, says CEO, but company has "substantial debt obligations"
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By Alan Duke
CNN
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(CNN) -- Muzak, the company that put pop, string-filled arrangements of rock songs in your elevator, filed bankruptcy papers Tuesday after it missed a $105 million payment to creditors.

The Muzak company is best known for background music piped into places such as elevators.

The Muzak company is best known for background music piped into places such as elevators.

The pipeline of easy listening will continue to flow as Muzak restructures its debt during the Chapter 11 process, the company said.

"Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago," Muzak CEO Stephen Villa said.

Muzak's cash flows doubled in the last three years, Villa said, "demonstrating that our business continues to perform well even in today's challenging environment."

Along with its ubiquitous elevator offerings, Muzak and its 14 affiliates -- all privately owned -- produce on-hold messages and install sound systems, digital signs and drive-thru systems for retail businesses.

Bankruptcy documents showed Muzak owes its largest creditor -- U.S. Bank, as indentured trustee -- about $370 million, nearly all of it due this year.

Muzak spokeswoman Meaghan Repko said the filing was voluntary and in cooperation with the creditors.

The weakened global economy was not a factor, she said, noting the company's profits have been rising in recent years.

The Chapter 11 protections will allow Muzak time to restructure the debt, which was incurred a decade ago, she said.

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