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Circuit City resorts to bankruptcy to stay afloat
Circuit City has filed for reorganisation relief in the United States Bankruptcy Court for the Eastern District of Virginia in Richmond. The retailer - the second largest in the electronics goods space after Best Buy - has clearly been struggling for the last several months. In November alone, it slashed its workforce by 20% and announced plans to close 155 stores.
With the protection of bankruptcy court, Circuit City can continue to pay its remaining employees. It also is seeking approval from the court to continue to support customer returns, exchanges and gift cards.
The company has negotiated a US$1.1 billion debtor-in-possession revolving credit facility that will supplement its working capital and replace its $1.3 billion asset-based credit facility. Provided by the same lenders, this new facility gives the retailer some wiggle room as its maps out its next moves.
