Goodbye Circuit City

March 8, 2009 – 9:52 pm – No Comment

Today was Circuit City’s last day in business. The Richmond, Virginia based electronics chain closed the remaining 567 stores today leaving 18 million square feet of empty retail space in its wake.

Circuit City filed for Chapter 11 bankruptcy protection in November with hopes of emerging as a stronger company able to compete in the ever-expanding marketplace; shedding its $2.32 billion in debt and getting out of older real estate.

Unable to work out a sale or secure new financing, the company will instead spend its remaining days tallying money from the sale of its assets, breaking or assigning its leases and paying off its growing list of creditors.

Circuit City owes nearly $625 million to its 30 largest unsecured creditors — mostly vendors who supplied the DVDs, flat-screen TVs and headphones on Circuit City shelves. They must wait to be paid until secured creditors such as bank lenders are satisfied.

This is an example of a company that did not survive a Chapter 11 filing. In my last post, I wrote about how a couple of Republicans are speaking out about GM filing for bankruptcy. If the same thing were to happen to GM…there would be hundreds of thousands of jobs lost. You also have to take into account the supply chain that automobiles create, another few hundred thousand jobs would be cut if GM had to liquidate.

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