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Valley Media Files for Bankruptcy Protection

November 21, 2001|Jeff Leeds

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.

Valley recently shut down its Louisville, Ky., facility and the DNA distribution company, which handled such labels as Death Row Records.

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