Valley Media Inc., one of the main distributors for independent record labels, filed for Chapter 11 bankruptcy protection on Tuesday. The long-expected move followed the collapse of merger talks with distributor Alliance Entertainment Corp.
Valley's filing said the firm, based in Woodland, near Sacramento, has $240 million in assets and $260 million in debts. The bankruptcy filing, which is expected to be turned into a liquidation, probably will have a devastating impact on dozens of small, independent record labels and the nation's five major record conglomerates. Record industry executives say Valley Media owes millions of dollars to various record labels.