Circuit City filing for Bankruptcy

No ****. Their service is always terrible, prices are usually higher, and don't honor their warranties. The local one is right next to a best buy, it is ALWAYS dead and best buy is always packed. I feel bad for all the employees loosing their jobs but CC deserves it. They suck as a business.

Quote:

Circuit City files for bankruptcy protection Monday November 10, 12:09 pm ET By Michael Felberbaum and Vinnee Tong, AP Business Writers Circuit City seeks bankruptcy protection amid pressure from vendors ahead of the holidays RICHMOND, Va. (AP) -- Circuit City Stores Inc. filed for bankruptcy protection on Monday heading into the busy holiday season as analysts question whether the nation's second-biggest electronics retailer will be able to survive. ADVERTISEMENT The company said it decided to file for bankruptcy protection because it was facing pressure from vendors who threatened to withhold products during the holiday period. The company also said it cut 700 more jobs at its headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers. Circuit City filed for Chapter 11 protection, which will allow it to hold off creditors and continue operations while it develops a reorganization plan. Its Canadian operations also filed for similar protection. Doing so "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," James A. Marcum, vice chairman and acting president and chief executive, said in a statement. Shares in Richmond, Va.-based Circuit City fell 14 cents, or about 56 percent, to 11 cents on Monday before being halted. Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers. While the retail industry overall is facing what's expected to be the weakest holiday season in decades, Circuit City's struggles have intensified as nervous consumers spend less and credit has become tighter. In court documents, Chief Financial Officer Bruce H. Besanko said three factors led to the bankruptcy filing: erosion of vendor confidence, decreased liquidity and the global economic crisis. "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," Besanko said in the filing. The company's biggest creditors are its vendors: Hewlett-Packard has a $118.8 million claim followed by Samsung ($115.9 million), Sony ($60 million), Zenith ($41.2 million), Toshiba ($17.9 million) and others. Smaller creditors include GPS navigation system maker Garmin, Nikon, Lenovo, Eastman Kodak and Mitsubishi. Stifel Nicolaus & Co. analyst David Schick said in a note to investors that since Circuit City is a well-known brand it could re-emerge from bankruptcy, saying "We believe the marketplace has a slot for a higher-end chain with a commissioned sales force." But Stephen Lubben, the Daniel J. Moore professor of law at Seton Hall Law School, said the company's surivial depends on "whether these folks here like Sony and Hewlett-Packard are going to be willing to work with Circuit City going forward or whether they think they're a lost cause and cut them off permanently." Lubben said it has the added burden of facing Chapter 11 at a difficult time for retail. Meanwhile, Deutsche Bank analyst Mike Baker told investors that consumers learning about Circuit City's bankruptcy may choose elsewhere due to a lack of confidence in the company. Circuit City Stores Inc. announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people. "This isn't a surprise," JPMorgan analyst Christopher Horvers said of the bankruptcy filing, adding that the reorganization could help the company get out of leases for certain bad store locations. Circuit City had also said last week that it would further cut back on new store openings and planned to work with landlords to renegotiate leases, lower rent or terminate agreements while it dealt with tightening credit from its vendors. "At the end of the day I think it's really about an inventory position," Horvers said. "If they can get inventory into the stores, I can think they'll remain competitive." Horvers also found it encouraging that the company was able to secure financing. Circuit City said it had lined up $1.1 billion in loans to provide working capital while it is in bankruptcy protection. That replaces a $1.3 billion asset-backed loan it had been using. Loans to operate while in bankruptcy are called debtor-in-possession, or DIP, loans. "That's a big DIP in the current market," said John Penn, a partner at law firm Haynes & Boone who is not involved in the case. "To secure that size DIP now is quite a achievement. With the news of the cuts last week -- and vendors wanting to know they can get paid -- having a recognizable source like a DIP can calm a lot of vendor concerns." The company said in its filing that it had $3.4 billion in assets and $2.32 billion in liabilities, as of Aug. 31. Circuit City posted a wider second-quarter loss in September with a 13 percent decline in sales at stores open at least a year. The company has been under new leadership since late September when Chief Executive Philip J. Schoonover agreed to step down. Shares in Circuit City have traded under $1 for more than a month and the company received a warning about that last month from the New York Stock Exchange.

Meh, another one bites the dust.

let it burn.

best by that is near me is dominating them in business. CC never has anyone in the lot. at BB its hard to find a parking spot.

Kierra wrote:

let it burn. best by that is near me is dominating them in business. CC never has anyone in the lot. at BB its hard to find a parking spot.

Exact same thing here.

I am waiting to see if Area51 chimes in. He manages a Verizon section in the local CC here. Wonder if he getting effected by this.

Heh if CC thinks they'll make it to christmas let alone thanksgiving they're crazy...

Face it guys. The economy is going to ****, which we all already knew. If Obama & Congress can't fix this, I give it a year before we're in a depression.

SickWitIt wrote:

Face it guys. The economy is going to ****, which we all already knew. If Obama & Congress can't fix this, I give it a year before we're in a depression.

CC going down has nothing to do with the economy. It has to do with their buisness sucking.

If it is the economies fault why are their no stories about BB going down and how come their lots are always packed full?

Nice try though. The government should NOT step in and help CC. Survival of the fittest. Someone else will come along and start a company up. Just the way it works.

I'm not saying CC was directly related to the economy, It just reminded me when another huge chain is closing.

The government doesn't even need to think about bailing out retail chains. If anything, they need to start considering bailing out GM, and auto manufacturers. If it wasn't for the fact that they are the backbone of this country, than I'd say let them rot - but that isn't the case.

I shop at CC way more then BB. Best Buy is horrible in every way. I have never had ANY problems with circuit city. Always far better customer service, they price match to there website (long before that stupid commercials came out). Also they have a MUCH better policy when it comes to replacement plans then best buy.

Golfer wrote:

I shop at CC way more then BB. Best Buy is horrible in every way. I have never had ANY problems with circuit city. Always far better customer service, they price match to there website (long before that stupid commercials came out). Also they have a MUCH better policy when it comes to replacement plans then best buy.

Wow. See it is obviously a different case from you. Maby your local one is good. I dunno. But all my experiance have been HORRIBLE. Every time. Customer service is some of the worst I have seen. And I am always reading stories where people want to go in and shoot up the place.

They just built a CC in my area, literally like 5 months ago. Now it's on the list of CC's to be closed.

And they haven't actually filed for Bankruptcy yet. They filed for "Bankruptcy Prevention".

I <3 cc

Shut up Kevin. Answer your AIM Im's you douchebag.

I read 10x more horror stories about best buy. How about the most recent gem of trying to replace a 2200 sony viao with a Asus EEE???? Obviously they are bigger, so more bad stoires are likely to pop up...

Circuit City is way nicer to shop at because they don't have 100 morons running around the store thinking they know everything and constantly trying to help you. That is what really makes me not set foot in a best buy anymore. I would much rather pay more to not get bothered when I shop.

But yeah, I hope circuit city hangs on, at least then I still have somewhere I can go and actually look at stuff before I order online...... I will never again go near a best buy home theater department....

^^I disagree.

But the best buy here in Tulsa just opened a Musical Instrument department. It is insane, they just play with instruments all day, my dream job.

Golfer wrote:

I read 10x more horror stories about best buy. How about the most recent gem of trying to replace a 2200 sony viao with a Asus EEE???? Obviously they are bigger, so more bad stoires are likely to pop up... Circuit City is way nicer to shop at because they don't have 100 morons running around the store thinking they know everything and constantly trying to help you. That is what really makes me not set foot in a best buy anymore. I would much rather pay more to not get bothered when I shop. But yeah, I hope circuit city hangs on, at least then I still have somewhere I can go and actually look at stuff before I order online...... I will never again go near a best buy home theater department....

Then your local CC is completely different than the Racine one. BB owns CC in racine. At least imo.

Down it Fort Lauderdale I prefer CC way more than BB, but in Gainesville it's the complete opposite. I guess it just depends on where you are.

Columbus OH BB > CC always.

F both, i get my electronics through the interweb.

Saw this on cnn. bb > cc

I worked for Circuit City for a couple years, and I'm not surprised its going under . The store I worked in had horrible management and all kinds of problems . About five or six years ago they fired all their experienced well-paid commission salesmen and turned everyone into a low-wage hourly employee like Best Buy . After that it seemed like wave after wave of cost-cutting profit-boosting measures.. obviously a panic to update their business model since competition was pushing them out . I can't say I'll be sorry to see them go, I hated working there . When I quit I spit on my boss and told him to go **** himself in the middle of the store . One of my better moments .

Thats halarious ^

The CC best to me sucks. Just last tuesday it took me nearly 30 minutes just to find and purchase Resistance 2. No one knew what the hell was happening/going on at the store.

Best buy is/has always been a great place to shop for me.

CC is stupid.

I just saw this on the news.

Always cheaper in New England. I but from their discount store on Ebay all the time.

TRogers wrote:

And they haven't actually filed for Bankruptcy yet. They filed for "Bankruptcy Prevention".

About this you are wrong my friend....They are filing chapter 11 ie. protection Meaning they would like to be excused of all tax filings for a period of time in order to restructure the company's finances. This only affords them protection from hostile takeover (Forceful buyout).

Ours already started the store closing sale ...
20% off all CD's and DVD's

Won't be look till the government's bailing them out.