Circuit City files for Chapter 11 protection, cuts management staff
Posted November 10, 2008 7:51 a.m. EST
Updated November 10, 2008 8:25 a.m. EST
NEW YORK — 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."