Earlier this week, we posted a story about Circuit City’s 150+ store closings throughout the United States. Today, it was announced that the chain officially filed for Chapter 11 bankruptcy protection. But what does that really mean and how does it effect gamers and other consumers?
It means that Circuit City wants to stay in business.
When a business is in trouble, it can choose to file for either Chapter 7 or Chapter 11 bankruptcy. With Chapter 7, the business sells off everything and pays back creditors as much as possible with that money. Any debts still owed simply don’t get paid, and everyone moves on, though their asses are a little tender (it is bullshit, I hate bankruptcy laws, but whatever, I’m not getting into that now).
Chapter 11 is bankruptcy protection for a company that wants a somewhat fresh start, but think they can reorganize and be successful. They have to come up with a new business plan proving that they can get out of debt, and the court must approve this new business plan. The company’s stockholders and creditors are represented by a committee that helps form the plan through negotiation. While this is all going on, though, Circuit City stores can be up and running, and their stock can continue to be traded. Basically, Chapter 11 buys the company some time and doesn’t completely hose creditors (which, at this point, include Sony and tons of other companies).
So what does that mean to you? Well, it means that if the store in your area hasn’t announced that it is closing, it likely won’t, unless there is another massive wave of closings. If, however, Circuit City’s plan is unsuccessful, they’ll have to liquidate, which means that ALL Circuit City stores will close and you’ll likely get some great deals if you hold out long enough.
If Circuit City does make it, through, there will likely be some significant changes. Lower prices? Maybe. Better service? I hope so. They might expand their offerings to gamers, or they might stop selling games altogether (given the gamin industry boom that’s going on, I think the former is more likely). Maybe they’ll become a viable used game retailer, and frankly, I’d like to see anyone competing with Gamestop right now in that market. Even if used games piss off some people. Note that this is all pure speculation on my part.
In any case, it is worth it for you to keep up-to-date with Circuit City news right now. Chapter 11 can be successful (just ask Kmart), and even though I’m not a fan of this company right now, I’ll be interested to see where they go from here. This could be a really good thing for gamers and other electronics consumers.
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The Circuit City near me was one on the List for closure. They started liquidating all stock last Friday. At that point the most they were discounting was 20% on CDs and DVDs. All the game related items were 10% off the original price. ANd they still had a lot of games marked at $60. I am hoping that in a few weeks they will drop those prices and raise the discount and still have a decent selection of games available.
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