Economy Short Out Circuit CityBy Reuters | Print
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The nation's second largest electronics retailer, already in bankruptcy protection, is unable to recover its standing. It will liquidate its remaining 567 stores and elimiated more than 30,000 jobs.
ATLANTA (Reuters) - Bankrupt retailer Circuit City Stores said on Friday it will liquidate its assets after it failed to reach a deal with creditors and lenders regarding a potential sale of the company.
Circuit City, the second-largest U.S. specialty electronics retailer, was due to present the results of an auction for its assets at a hearing in U.S. Bankruptcy Court in Richmond, Virginia, on Friday.
It had conducted negotiations with potential bidders to sell the company, but had advised that liquidation was possible if no deal was reached.
"Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction ... and so this is the only possible path for our company," Vice Chairman James Marcum said in a statement.
Shares of the chain fell 68 percent to 5 cents.
Circuit City filed for Chapter 11 protection in November, citing a deteriorating cash position and tighter terms from vendors. It has liquidated and closed 155 stores, and now has about 567 U.S. stores.
It has struggled behind Best Buy Inc and faced heightened competition from other store chains, such as discounter Wal-Mart Stores Inc. Best Buy shares rose 1.5 percent on Friday after the Circuit City announcement.
The specialty chain is the biggest retailer to fall so far as rising unemployment and tighter credit lead consumers to halt spending and spur retail failures.
Restructuring experts are expecting a wave of store closures and potential bankruptcies as the soft economy continues to pressure business.
Last week, the retailer received bankruptcy court approval to proceed with an auction to sell the company. At the time, Circuit City said it was in talks with two undisclosed parties that could either buy the company or provide additional financing.
Circuit City was founded in 1949 when Samuel Wurtzel opened Ward's, Richmond's first retail television store.