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Circuit City files for bankruptcy protection

by Scott Bicheno on 10 November 2008, 15:38

Tags: Circuit City

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Last throw of the dice?

US electronics giant Circuit City has filed for Chapter 11 bankruptcy protection as it tries to reorganise in the face or a worsening liquidity crisis.

Circuit City is insisting that it: "remains fully operational and open for business" and that it has "negotiated a commitment for $1.1 billion debtor in possession financing". A similar move has been made on behalf of its Canadian operations.

A week ago Circuit City announced restructuring plans that included the closure of 155 stores. In the announcement it blamed the macroeconomic climate, stricter business terms from vendors and an as yet unpaid income tax refund of $80 million for the move.

"The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively," said James A. Marcum, vice chairman and acting president and CEO of Circuit City.


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