Car Toys plans to sell many of its brick-and-mortar locations after filing for bankruptcy, following years of struggling with falling sales and mounting debts.
The company, an Auburn-based car audio retailer with national reach, voluntarily filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Western District of Washington. This type of bankruptcy lets the company reorganize and continue operating, with the goal of keeping its doors open.
Car Toys plans to sell 35 of its 48 stores located across four states to five buyers for a combined price of almost $14 million, according to its legal filings. The company said the buyers are a “combination of tenured employees and local competitors.”
The company announced to customers that it will also be eliminating its gift card and Groupon program immediately, and neither will be accepted past Oct. 18.
The bankruptcy is necessary in order to sell those locations, keep positions for Car Toys employees, continue operations and “maximize its business value for the benefit of its creditors,” the company said in a news release.
Since May 2023, Car Toys has taken out loans to cover its “ongoing net operating losses,” according to court documents.
This year through Aug. 17, the company reported over $52 million in gross revenue, a major drop from full-year gross revenues of nearly $113 million and $98 million in 2023 and 2024, respectively.
Car Toys and its team of five lawyers from firm Cairncross & Hempelmann didn’t immediately respond to a request for comment Friday morning.
Kathryn Evans, the attorney representing the Office of the U.S. Trustee in the arrangement, also didn’t respond to a request for comment.
“The Car Toys family has had an incredible journey the last thirty-eight years with our employees, our customers and the communities we serve,” founder and chairperson Dan Brettler said in a news release.
“While we find ourselves in a less-than-ideal chapter, I am extremely proud of my team and pleased that the Car Toys brand, the majority of our jobs and our outstanding customer service and installation, will continue in all of the markets that we serve.”
Car Toys claims the title of “largest independent multi-channel specialty car audio and mobile electronics retailer in America” on its website. It sells various brands of stereos, subwoofers, alarms and other car parts, and also offers services like installation, car detailing, window tinting and ceramic coating.
Of 48 stores across the country, 14 are located in Washington, said the news release.
One potential buyer is Foss Audio and Tint, which would purchase six Colorado locations, eight Washington stores and a facility in Oregon. Selway Sound, doing business as Aspen Sound, would buy two Washington locations, and Drive-In Autosound would purchase one Colorado store.
A pair of employees, Troy Parcels and Chris Pritts, would buy 12 stores in Texas, while another pair, Don Longworth and Raul Shakarov, would purchase five locations in Oregon.
All potential buyers are still pending approval by the bankruptcy court.
Car Toys said in legal filings that the bankruptcy is essential to keep paying its operating expenses, including the wages and benefits of its workforce of almost 500 people, and in order “to maintain its ongoing operations and successfully maximize its assets for the benefit of creditors.”
The company estimated that it has hundreds of creditors.
In March, Car Toys sought to find a buyer or an investment partner due to “continuing financial challenges,” according to court documents. It engaged with more than 40 potential strategic buyers.
It’s currently fighting several lawsuits and lists various losses, including attempted burglaries, shoplifting incidents and vandalism recorded over the past year.
Car Toys first opened in Bellevue in April 1987, with Brettler at the helm, according to its website. The brand’s first Oregon location was established in July 1996, with its expansion hitting Colorado in May 1999 and Texas in the early 2000s.
