Sam Ash to be purchased by Gonher Music Center for over $15 million

Sam Ash to be purchased by Gonher Music Center for over $15 million

US music retailer Sam Ash has found a buyer in Mexican retailer Gonher Music Center, after filing for bankruptcy in May of 2024. Despite the purchase, all of Sam Ash’s retail locations are still set to close.

READ MORE: Sam Ash’s assets to be auctioned off following bankruptcy filing 

A new filing to the court overseeing Sam Ash’s bankruptcy made yesterday (25 June) states that the purchasing agreement made on 21 June, following the auction on 20 June, has been finalised. This means that Mexican retailer Gonher Music will purchase “substantially all” of Sam Ash’s remaining assets, excluding its closing-down sale stock for $15.2 million – plus liabilities and fees.
While all of Sam Ash’s retail stores are still set to close, and those who work in the retail locations are unfortunately set to lose their jobs, the purchase agreement does state that some employees are eligible to be transferred to Gonher, presumably to keep the online side of Sam Ash running.
But even for those who can remain at the company, it’s still not ideal, according to a Reddit user who claims to be a Sam Ash employee. They allege that those in the corporate office and the warehouse have been given the option to remain to keep the online business going – however, with a “significant” pay cut.
The user also expresses their dissatisfaction with the apparent imbalance of the severance situation for those who are losing their jobs. They claim that “the heads of Sam Ash will have their debts paid and receive significant severances”, while the majority of employees are simply being paid an extra $50 per week worked until closure, paid out upon their last day. The store managers that are receiving severance have allegedly only been offered less than two weeks of pay, on average
While we have to take the user’s word for it that they are a Sam Ash employee, they did also post about working there when the first rumours of closure were being discussed. Additionally, what they have said does line up to some degree with the filings – the agreement does note that anyone Gonher Music Center wants to employ following the closure must be offered “reasonably similar” roles, benefits and salaries. But it doesn’t specify what “reasonably similar” means in practice – this could still constitute a pay-cut for the transferred employees. Additionally, the purchase agreement does not clarify any particular amount required as severance pay – instead, it states that any obligations to employees before the closing date are an internal matter for Sam Ash.
The agreement also explicitly states that it doesn’t “guarantee employment for any period of time or preclude the ability of [Gonher] or any of its affiliates to terminate any transferred employee for any reason.” Additionally, Gonher is not obligated by the agreement to “continue any company benefit plans, employee benefit plans or arrangements.”
When Sam Ash initially announced its stores would be closing, Music Trades editor Brian T. Majeski reflected on the changing music retail landscape, which has been irrevocably shaken by the presence of online-focused stores such as Sweetwater. His letter emphasised how much the costs of operating physical storefronts can strain brick-and-mortar music locations, in comparison to the relative efficiency of running a mainly online – but still country-wide – business.
“Sales-per-employee for the typical online music retailer is over $700,000, versus $220,000 for brick and mortar,” Majeski wrote. “Industry leader Sweetwater generates revenue out of two distribution centres that rival what Guitar Center produces from over 300 stores. Given that Sam Ash’s  online store will remain, while the retail side of things is set to close entirely, his analysis seems more prescient than ever.
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