Circuit City Files for Chapter 11 in VA.
Circuit City has filed for chapter 11 bankruptcy protection in Virginia and for the equivalent in Canada. Creditors will provide loans to bail out the troubled retailer, and the loans will be used to pay off old loans and stock the shelves.
According to the WSJ Circuit City claimed assets of $3,400,000,000 and liabilities of $2,300,000,000 in it’s filing this morning.
If you have ever wondered where your tax refund is from the I.R.S., imagine how Circuit City feels. They are waiting on a tax refund of $75 Million.
In an employment update, the company expects to cut staffing at the stores that it is not closing. Expect the layoffs to amount to about 20%. As mentioned in the news of the store closings, none of them are in Delaware. But Delaware will lose some employment as a result of these further cuts.
Circuit City stores in/near Delaware:
Circuit City?
1350 N Dupont Hwy, Dover, DE?
Circuit City – Newark?
700 Center Boulevard, Newark, DE?
Circuit City – Wilmington?
4130 Concord Pike, Wilmington, DE?
Circuit City – Salisbury?
2640 North Salisbury Boulevard, Salisbury, MD?
James A. Marcum, vice chairman and acting president and chief executive officer of Circuit City Stores, Inc., said, “We recently have taken intensive measures to overcome our deteriorating liquidity position. The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively. In the meantime, our stores remain fully operational, and our associates are focused on consistent and successful execution this holiday season and beyond.
“We appreciate the support we have received from our lenders in the midst of such a tight credit market. With this support, we believe we have the opportunity to leverage our market position and the strength of our brand to restore Circuit City to solid financial footing,” continued Marcum.
“We understand how difficult the recent announcements have been on everyone at the company, and we recognize the changes personally affect many people. Further, we know there is never a good time for individuals to be impacted by decisions like these, and we deeply regret the effect this has on our associates. I want to thank them for their continued loyalty and dedicated effort as we go forward with the belief that implementing long-term and lasting change to our business will come by satisfying our customers, one at a time,” concluded Marcum.
The law firms of Skadden, Arps, Slate, Meagher & Flom and McGuirewoods LLP are representing Circuit City in the bankruptcy matter.
Remember when Circuit City was a favorite in “Good to Great” by Jim Collins? Remember when we thought being big gave you clout with customers and vendors to produce long-term returns (Michael Porter’s 5 Forces Model)? It’s time we recognize that the old approach to management doesn’t work in a rapidly shifting competitive world. There are winners in today’s market, but they follow a different approach. Read more at http://www.ThePhoenixPrinciple.com
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