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Circuit City files for Chapter 11 protection, cuts management staff

Posted November 10, 2008

— Circuit City Stores (NYSE: CC) on Monday filed for Chapter 11 bankruptcy about a week after it said it would close 20 percent of its stores.

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

Chapter 11 protection typically allows a company to hold off creditors and operate as normal 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. Courts do not require companies to provide more specific figures in filings.

The company says it anticipates it would have money to distribute to unsecured creditors, who get paid last.

The store closings announced last week do not affect the Triangle. One store in Charlotte was on the closing list.

Circuit City also said that on Friday it reorganized its corporate structure as part of its shrinking number of stores.

"The company recognizes that, to achieve these objectives, there is a critical need to create a more efficient chain with a streamlined cost structure. As previously announced, the company is in the process of closing 155 domestic segment stores," Circuit City said in a statement.

"This week, the company took action to realign its regional and district support structure commensurate with the smaller store base, which will include approximately 566 stores when the domestic segment store closings are completed. As a further cost-saving measure, the company reduced its corporate headquarters workforce on November 7, 2008. These corporate, regional and district support reductions totaled approximately 700 positions and are in addition to the reductions resulting from the store closings. The store closings and support workforce reductions will result in a combined domestic workforce and store base reduction of approximately 20 percent."

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  • raldude Nov 10, 2008

    I really feel bad for the employees. They are the ones that will suffer while the company can hide behind the bankruptcy laws. Starglow2005..why would you take the time to drive back the CC just to tell them why you didn't shop there? Seems like you had too much time on your hands.

  • Rolling Along Nov 10, 2008

    The problem with CC is in it's senior management and their inability to see how their stores operate. About 17 months ago they did away with a lot of their top performing sales people because it was "costing" them too much money. When those people left so did their profits...idiots in upper management, what a way to run a company.

  • starglow2005 Nov 10, 2008

    I feel bad for the affected employees, but not Circuit City. CC used to be a great store until they started cutting back on the variety of items they stocked and they wouldn't deal with you to make a sale. I went into CC to buy a specific TV and CC refused to budge on the price. I went down the street to their competitor and bought the exact same TV for much less. I went back to CC and explained to them why they lost a sale, but they got mad at me and said I just came back to rub their nose in it, which is when I stopped shopping at CC. I also no longer shop at Sears or Kmart because of poor customer service experiences. Good customer service sells.... bad customer service does not.

  • silvfx Nov 10, 2008

    its part of a long overdue adjustment in our economy, too many people buying too much stuff they cannot afford. Its that simple, if you cannot pay for it then don't buy it.

  • Space Mountain Nov 10, 2008

    I don't feel sorry for them. They denied me credit for a TV a couple years ago. I went to Sears and was instantly approved. I paid the TV off before any interest accrued, too.

  • rsitzejr Nov 10, 2008

    Yep Paradoxinlife, I quit doing business with them because of the way they treated their employees. Haven't bought anything from them since, Best Buy has got most of my business.

  • Starlyte Nov 10, 2008

    Well Pineview, I know they had some really huge cuts at a few stores in the area about a year ago. As for mediocre sales people left, I do not think so. My fiance is a Supervisor here and his store does really well. But right now with the economy as it is, I see a lot of stores shutting down, or filing Chapter 11. Layoffs are all around us. It is sad regardless, I hate to see anyone lose their job.

  • ParadoxInLife Nov 10, 2008

    I'm pretty sure this happened more than once, the first time was the transition from commission to non-commission. They set all salaries based on your "hourly average" and if it was too high..you got cut. They pulled out the old "two shift" gag, if you came in in the morning it was your last day unless you accepted a lower paid position, if you came in the afternoon you were already hourly or didn't work very hard and got to keep your job. Second time was 2007...you can search circuit city black tuesday and it should come up.

  • Pineview Style Nov 10, 2008

    Well, I don't want to say that they are getting what they deserve, but I remember a few years ago, in an effort to cut costs, they cut back a lot of their top performing sales people's hours and commissions. In turn these people went to work somewhere else, leaving the mediocre sales people. The result was that CC's sales went down and they have yet to recover.

    Can anyone else verify this?

  • Mr. Reaction Nov 10, 2008

    Push the "EASY BUTTON" circuit city!!!!!!!!!!! Then our goverment can give you "bail out" money too!