Circuit City Files Bankruptcy Protection

Circuit City Files For Bankruptcy Protection
Monday November 10, 2008
The Associated Press

Circuit City Stores has filed for bankruptcy protection in the United States and for its Canadian subsidiary, about a week after it said it would close 20 per cent of its American stores.

The Richmond, Va.-based electronics retailer has been struggling as nervous consumers spend less and credit has become tighter.

It filed for Chapter 11 protection from creditors in the U.S. today, and its wholly owned InterTan Canada subsidiary said it is filing under the Companies' Creditors Arrangement Act.

InterTan operates or licenses 772 The Source by Circuit City neighbourhood electronics stores across Canada.

Its filing coincides with the parent company's petition for reorganization in U.S. Bankruptcy Court for the Eastern District of Virginia.

Court protection typically allows a company to hold off creditors and operate while it develops a financial reorganization plan.

Circuit City says it has more than $1 billion in assets and more than $1 billion in liabilities.

The company says it anticipates it will have money to distribute to unsecured creditors, who get paid last but ahead of shareholders.

Circuit City also said it has negotiated a commitment for a US$1.1-billion debtor-in-possession credit facility to provide working capital and additional liquidity while it works to reorganize the business.

This "will enable Circuit City to pay vendors and other business partners for goods and services provided after the filing."

Circuit City's filing caused a termination of InterTan's credit facilities, the Barrie, Ont.-headquartered subsidiary said.

"We regret the necessity of this action and will be working diligently with our suppliers, employees and creditors to produce a successful holiday selling season," stated InterTan president Ron Cuthbertson.

He added that the Canadian stores have been delivering stable or improving financial results.