November 10, 2008, West Palm Beach, FL–Breaking news–(JusticeNewsFlash.com)–Richmond, VA based based consumer-electronics retailer, Circuit City files for Chapter 11 bankruptcy protection today at the United States Bankruptcy Court for the Eastern District of Virginia. Circuit City executives are citing pressures from the downturn in the economy that led shoppers to cut back on discretionary purchases and competition from Best Buy Co. and Wal-Mart Stores Inc. are the top reasons for the filing of bankruptcy protection in court today.
Circuit City, a 59 year-old electronics company, has been suffering from declining sales, traffic and cash. Last week the company planned to close 255 underperforming stores in the U.S. and cut 7,300 jobs in a last-ditch effort to stay afloat. Circuit City has seen its shares tumbling 99% from a 52-week high of $8.24. The company negotiated a commitment for a $1.1 billion debtor-in-possession revolving credit line which will allow it to pay vendors and operate business as usual. The new credit line replaced its $1.3 billion asset-based credit line provided by the same lenders.
The United States recent financial sector meltdown also exacerbated Circuit City’s problems. Credit card purchases were responsible for 75% of Circuit City’s sales according to company officials. The unfortunate financial state of affairs Circuit City finds itself navigating could prove very positive for Best Buy, Wal-Mart, and Costco Wholesale Corporation according to industry observers. There are an estimated $10.5 billion of annual domestic sales up for grabs if Circuit City fails to survive. Circuit City insiders are hoping to emerge from the bankruptcy protection in the first half of 2009.
Brought to you buy Heather L. Ryan a reporter for JusticeNewsFlash.com. Justice is a web site visibility forum allowing lawyers, journalists, and other professionals the opportunity to provide breaking news to their communities using an easy to access, convenient medium. Topics include business litigation actions, employer and employment law articles, worker rights litigation, and government health and law issues.