Circuit City files for bankruptcy, seeks Chapter 11 protection

Following a veritable beating in the New York Stock Exchange, Circuit City released a statement announcing that they have filed for bankruptcy. The company mentioned that they intend to stay in business while they come up with a plan to restructure.

Following, a veritable beating in the New York Stock Exchange, Circuit City released a statement announcing that they have filed for bankruptcy.

The second largest electronics retailer in America cited rising competition with companies like Best Buy, Wal-Mart and online electronic retailers like Amazon as the reason behind their poor financial performance. That consumers are also finding it harder to afford their merchandise certainly didn’t help any.

On September 29, Circuit City reported a loss of US$ 239.2 million in sales, more than triple the losses of last year. As previously mentioned in another article, November 5 saw them close to twenty percent of their US stores and lay off a proportionate number of their 43,000-strong workforce.

Despite the obvious hardships, Circuit City has announced that they intend to stay in business while they come up with a plan to restructure. In fact, they have sought Chapter 11 of the US bankruptcy laws in Richmond, Virginia today, which essentially allows them to continue running the business and tend to the “reorganization” under the bankruptcy court supervision.

The filing for Chapter 11 was spurred by their suppliers demanding up-front cash for shipments upon getting concerned of the store’s declining sales of almost US$ 1,500 in U.S. and Canadian branches.

Good luck, CC! You’re going to need it.

• Rumor: closing Circuit City stores to have clearing-out sale for games
• More depressing economic news: Circuit City shutting 155 stores, to lay off thousands

Via Bloomberg