Circuit City Stores, the struggling electronics retailer, filed for bankruptcy protection on Monday, becoming one of the biggest, best-known corporate names to collapse amid the faltering economy.
Circuit City filed for Chapter 11 bankruptcy protection in United States Bankruptcy Court for the Eastern District of Virginia, where the Richmond, Va., company is based. The company has 712 stores and 9 outlet stores, according to a court filing.
The company has long been an also-ran in the consumer electronics sector, consistently trailing its larger rival, Best Buy. Circuit City has faced several challenges this year, including a proxy contest mounted by an activist investor and a shakeup in its management this summer.
Retailers have been especially hard hit by the slowdown in consumer spending and the clampdown in the credit markets. Circuit City announced last week that it was closing 155 stores and laying off 17 percent of its work force, or about 1,300 employees.
“Without immediate relief, the Company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the Company and its stakeholders,” Bruce H. Besanko, Circuity City’s chief financial officer, wrote in a court filing. (That document is available below.)
The company said in its filing that it is seeking the court’s permission to obtain $1.1 billion in debtor-in-possession financing. Together with about $400 million remaining from a $1.3 billion credit line obtained before the bankruptcy filing, Circuit City said that it should have enough financing to make it through the holiday shopping season. (The $1.1 billion credit line will be reduced to $900 million on Dec. 29, after the holidays.)
Circuit City listed $3.4 billion in assets and $2.3 billion in debts, as well as more than 100,000 creditors like Hewlett-Packard.
The company said it aims to emerge from bankruptcy protection by the first half of 2009. It is being advised by Rothschild, FTI Consulting and the law firm Skadden, Arps, Slate, Meagher & Flom.
Below, the bankruptcy filing affidavit by Mr. Besanko:
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