Circuit City Stores, Inc. has announced that it will seek Bankruptcy Court approval to begin the process to liquidate the assets of the company.
“We are extremely disappointed by this outcome. The company had been in continuous negotiations regarding a going concern transaction. Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company,” said James A. Marcum, vice chairman and acting president and chief executive officer for Circuit City Stores, Inc., in the press release.
Circuit City will provide more details in the near term about the plans for the liquidation of the stores and other assets, the status of the company’s Web site and firedog services operations, the status of its Canadian operations and plans for the company’s bankruptcy proceedings.
The company does not anticipate any value will remain from the bankruptcy estate for the holders of the company’s common equity, although this will be determined in the continuing bankruptcy proceedings.
The company filed for Chapter 11 bankruptcy protection in November 2008. The case number for Circuit City’s Chapter 11 filing is 08-35653. The company’s store closing list is here.
As of December 31, 2008, the domestic segment operated 567 stores in 153 U.S. media markets. At December 31, 2008, the international segment operated through approximately 765 retail stores and dealer outlets in Canada.
Circuit City’s website currently states, in part:
Circuit City would like to thank all of the customers who have shopped with us over the past 60 years. Unfortunately, we announced on January 16, 2009, that we are going out of business… Liquidators will start arriving in our 567 stores across the U.S. over the weekend, and closing sales will start as early as Saturday, January 17. Closing sales will run as long as it takes to sell existing inventory, but are expected to wrap up by the end of March. When the liquidation sales are completed, the stores will be closed… Canadian operations will continue. They are not affected by the liquidation of Circuit City’s U.S. operations. The Canadian operations employ approximately 3,000 associates… Circuit City employs approximately 34,000 associates in the U.S.
Customers holding Circuit City gift cards may redeem them at full value at our stores during the liquidation sales. Once the stores are closed and the company is out of business, the gift cards will have no value… There will be clearance pricing, but specific discounts are not being announced. All sale prices are at the discretion of the liquidator. Prices are non-negotiable and all adjustments must be approved by the liquidator’s on-site managers.
Consistent with federal labor laws, Circuit City associates are receiving 60-days notice of the termination of their employment. Those who stay on to help with the liquidation, of course, will receive pay and benefits. Those who are dismissed earlier will be receiving pay and benefits for the 60-day period beginning January 16, 2009.
More info: here.
MacDailyNews Take: Our hearts go out to the helpless employees, but the fact is that Circuit City simply couldn’t compete and, it would seem, hadn’t yet become big enough to merit the government cheese. Perhaps they should have tried the banking and/or the welfare-programs-masquerading-as-second-rate-vehicle-manufacturing businesses, instead?
As for how this could affect Apple: Circuit City didn’t carry Apple Macs (they did carry iPods and Apple TV). Best Buy, however, does carry Macs – along with iPod and Apple TV, too. This development could positively affect Apple as former Circuit City customers head on over to their local Best Buy and finally get a chance to see and touch superior personal computing.
[Thanks to MacDailyNews Readers “Fred Mertz” and “GizmoDan” for the heads up.]
