Circuit City Files for Bankruptcy

Circuit City Stores, the struggling electronics retailer, filed for bankruptcy protection on Monday, becoming one of the biggest, best-known corporate names to collapse amid the faltering economy.

Circuit City filed for Chapter 11 bankruptcy protection in United States Bankruptcy Court for the Eastern District of Virginia, where the Richmond, Va., company is based. The company has 712 stores and 9 outlet stores, according to a court filing.

The company has long been an also-ran in the consumer electronics sector, consistently trailing its larger rival, Best Buy. Circuit City has faced several challenges this year, including a proxy contest mounted by an activist investor and a shakeup in its management this summer.

Retailers have been especially hard hit by the slowdown in consumer spending and the clampdown in the credit markets. Circuit City announced last week that it was closing 155 stores and laying off 17 percent of its work force, or about 1,300 employees.

“Without immediate relief, the Company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the Company and its stakeholders,” Bruce H. Besanko, Circuity City’s chief financial officer, wrote in a court filing. (That document is available below.)

The company said in its filing that it is seeking the court’s permission to obtain $1.1 billion in debtor-in-possession financing. Together with about $400 million remaining from a $1.3 billion credit line obtained before the bankruptcy filing, Circuit City said that it should have enough financing to make it through the holiday shopping season. (The $1.1 billion credit line will be reduced to $900 million on Dec. 29, after the holidays.)

Circuit City listed $3.4 billion in assets and $2.3 billion in debts, as well as more than 100,000 creditors like Hewlett-Packard.

The company said it aims to emerge from bankruptcy protection by the first half of 2009. It is being advised by Rothschild, FTI Consulting and the law firm Skadden, Arps, Slate, Meagher & Flom.

Below, the bankruptcy filing affidavit by Mr. Besanko:

Circuit City C.F.O.’s Bankruptcy Filing Affidavit

Go to Circuit City Press Release »

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Bob Hawthorne, LtColonel USAF Retired November 10, 2008 · 10:37 am

Circuit City will emerge from this , a reorganized electronics retailer….We have bought lots of computers and Televisions from this fine company……We look forward to them coming out of this with flying colors….

Well, we saw this coming. Add it to WAMU, Frontier Airlines, and others who have filed Chapter 11 this year.

Can’t anyone come up with a reason that qualifies for Bailout money under TARP?

One thing I can tell you for sure about Circuit City’s bankruptcy: They didn’t get there by overpaying their employees. They spent more than a *billion* dollars? The company *needs* to die. Let someone with brains have an opportunity to compete in the marketplace.

When history is written, the finger will point towards Wall St Ceo’s of Lehman Bros, Merrill, Goldman Sachs, et alia for starting a financial avalanche, bankruptcy, joblessness, foreclosures, etc.. Needless to say, the “crooks” will never have to answer for their world of derivative junk.

is not this the same company that showed its dedication to customer service and employee loyalty by firing all its most experienced employees a while back?

Good companies deserve to thrive, bad companies deserve to die, and it is time we got back to the idea that good companies are those that provide good product and service AND preserve jobs.

Unfortunately, in my brief experiences with this company, customer service was never demonstrated as a priority. I’m not surprised that they are among the first big retailers to fall in this crisis and I suspect it would have happened eventually regardless.

I don’t understand how this will help them get goods to sell for Christmas when they owe huge amounts of money already to HP, Samsung, Sony, Zenith, Toshiba, etc. Are these vendors crazy enough to keeping sending without (1) getting paid for what they are already owed, and (2) getting paid up-front for future goods???

They should have stayed out of the used car buisness. (Carmax)

Best Buy’s stores and customer service did them in. What is going to happen after the holiday season?? What consumer is going to buy products from them when their future is in doubt.

I buy all my electronic goods online, free shipping and no sales tax. The only reason I go to Best Buy is to see the product up close then I order it online at much cheaper prices. Circuit City needs to rest in peace!

i got faith circuit city will make it.

They say you never get a chance to make a second impression, and in my case with Circuit City so it went. It may sound trivial, but the first time I came across a Circuit City insert in my local Sunday paper I was appalled. Really. Everything else was bright and in color, grabbing your attention with stunning pictures making you want to run out and buy the product. Circuit City’s insert was in dull black and white. While I could thumb aimlessly in the other inserts, I would never thumb through the circuit City one.

Someone apparently told them about this because a few years ago they went to color, but by then my impression of them was set in stone.

As shoddy as their service actually was, I think the bigger issue is that they were trying to tout themselves as having better service, and were charging a premium for it. Not delivering certainly didn’t help, but ‘premium’ retailers are going to get hit first/worst as things continue to slow.

have had past business delatings with Circuit City in the past, I can tell you this shouldn’t a surprise to anyone. They have been a company that has grasped at straw after trendy straw while not being able to properly focus on the industry as a whole and the proper handling of the bottom line.

I say let ’em die and make room for competency in the market.

I bought a lot of stuff from my neighborhood circuitcity over the years. My first TV, first DSLR, son’s nintendo, my wife’s laptop etc. Many times amazon.com had better deals, but I loved the convenience of having a neighborhood store. It is sad to see circuitcity filing for bankruptcy.

My experiences with Circuit City have been always bad. Their store in my town (now closed) had poor stock and customer service. To top it all off, I bought a computer with a rebate, the store closed the next month, and I only got 1/3 the rebate I was supposed to. Circuit City is going to need a major reorganiztion and new management from the top on down to survive.

Do not buy anything at Circuit City that offers a rebate, because you may never get the rebate. Almost two years ago, I bought SanDisk CompactFlash memory cards with a rebate of $25 each for a total of $150. I followed instructions and even called several times, but I never got the rebates. The people who answer the phones, if you can get someone to answer (only part of the time do they answer), were no help as they have a script they follow and may be in Buenos Aries, Argentina. I also had to go to three stores to get the memory cards. I bought them online, but had to pick them up, and one store did NOT have the items, so they had to refund my money and I had to go to another store farther out. Thanks for reading this.

Remember COMPUSA — Circuit City’s is heading in the same vein as a poorly run company that could have been — dingy stores with indifferent employees, out of stock and dated inventory, crappy information systems. I say — put this company in the same class as Chrysler – what is the business case for this company to still exist????

Guess how grinch stole chistimas. Ecomomic downturn will not give any chance after chapter 11.

With great competitors like Best Buy & Amazon, it would be hard for anyone the make it.

Circuit City has fallen victim to not only the weak economy, but also their own mismanagement. I have never been impressed. Years ago when a Circuit City moved in to my area, customers were hounded from the moment they walked in the door because the sales staff were paid by commission and a person could hardly just look at something. Then, they got rid of that policy, then fired all the good sales staff, and nowadays you could keel over and die in the aisle and they’d step over you. In addition, their prices are consistently about 20% higher than the online retailers, so unless you want to be ripped off, there is no point going there.

Last year, when Circuit City fired all of their most experienced employees with zero minutes of notice or warning, I wrote to Circuit City headquarters and told them that I would not shop there again because I could not support such mistreatment of people.

And I haven’t. And Circuit City is getting their just rewards now.

Terrible customer service is typical at all the Circuit City stores here in California. We can only checkout at the “Customer Service” desk with no staff at the cash registers. Ever. That means we have to wait while someone in front of us makes a return. If you want to return anything that costs over $100, it takes two “supervisors” approval and about 20-30 minutes of your time even if it is obviously defective. Compared to Best Buy, they deserve to go out of business. Say what you want, but I’m glad to see them gone.

I just bought an iPod touch from there yesterday. Strongly considering returning it and waiting for the massive liquidation sales that will come our way soon.

Can’t really blame the economy for this. Circuit City’s been doing themselves in for the past 10 years. First with those ‘DVD’ players which were supposed to hook up to a phone line so you could ‘rent’ movies at home, then with trying to reorganise the company by firing the only employees that were capable of any aspect of customer service, then reorganising the stores so that you couldn’t find anything you wanted, much less the checkout to pay for it at! I say good riddance. We’ve got hundreds of great Internet retailers where I can buy electronics, and if nothing else, this will help the mom and pop stereo/TV shops.