I’m slowly seeing the red/blue “Crillee font” signs being phased out on the ShopKo stores in my area, in favor of their new logo, featuring a New Yorker-esque font in a chocolate brown color.

December 22, 2008

RICHMOND, Va. – Circuit City Stores Inc., the second-biggest electronics retailer in the United States, received final approval Monday for US$1.1 billion in financing in order to keep operating while it’s in Chapter 11 bankruptcy protection.

U.S. Bankruptcy Judge Kevin Huennekens approved the debtor-in-possession loans at a hearing in Richmond. The financing, which replaces a $1.3-billion asset-backed loan the company had been using, will be used to stock merchandise and pay employees.

Richmond, Va.-based Circuit City filed for bankruptcy protection last month as it faced pressure from vendors and consumers who aren’t spending. Its Canadian operations filed for similar protection.

Gregg Galardi, an lawyer for Circuit City, said that since filing for bankruptcy, the company’s sales have been hurt by the weak consumer spending environment and are down between 40 per cent and 50 per cent.

Galardi called the financing and restructuring efforts a “bridge to somewhere” and said the company is still pursuing the sale of all of its assets.

Circuit City, which has posted losses for seven of the last eight quarters, plans to keep operating while it develops a reorganization plan to deal with significant declines in traffic and heightened competition from rival Best Buy Co. and others.

Circuit City spokesman Bill Cimino said in an emailed statement that the company is improving its gross margin rate, which is helping to offset lower sales.

The judge also approved a motion to void severance agreements with about 40 former employees, including Philip J. Schoonover, who stepped down as chairman, president and CEO in September. Several employees were granted time to file objections because they had not received adequate notice. Employees can still seek payments like other creditors in the case.

Circuit City also was able to break service agreements with Google Inc. and National Service Alliance Inc., and hotel reservation contracts with the MGM Grand Hotel & Casino in Las Vegas and The Jefferson Hotel in Richmond.

The company said the contracts were “financially burdensome and unnecessary,” according to court documents. The court filings did not say how much Circuit City would save by voiding the contracts.

Schoonover, who was replaced by vice-chairman and acting president and CEO James A. Marcum, was expected to receive at least $1.8 million in a severance deal after resigning from his post, according to regulatory filings.

The judge also said he would rule at a Jan. 29 hearing on whether Circuit City could break the leases for all but one of the 155 stores it plans to close this month. The company cancelled an auction of the leases last week because it received too few bids. Monthly expenses for those leases are about $6 million, according to court documents.

Circuit City now plans to break a total of 304 leases. That includes 150 leases it had already received approval to break earlier this month for places where it no longer operates stores, which the company said cost $40 million annually.

Circuit City announced plans in early November to close 155 of its more than 700 U.S. stores by Dec. 31 and lay off about 17 per cent of its domestic work force, or up to 7,300 people. The affected stores are spread across 28 states, including multiple locations in Phoenix, Atlanta and other areas.

The company, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, hopes to emerge from court protection in the first half of next year. At that point, it could seek a buyer or operate on its own again.

anyone remember a bradleys store? everything i liked has went out of business but the good part is i wont’ go into a kohls or target unless i absolutely have to and i buy nothing from walmart but food and personal products so i guess i’ll save money since if i don’t like a store i will buy nothing but what i have to there.

The main thing that turned me against Circuit City was the DIVX thing they tried to pull to compete with and hurt DVD. It made me always prefer Best Buy when buying any new equipment.

Circuit City gets $1 billion in credit: Bankruptcy expert: Vendors could hinder retailer’s recovery

Louis Llovio and Michael Martz

November 13, 2008

Nov. 13–Circuit City Stores Inc. finalized a $1.1 billion line of credit yesterday to fund its bankruptcy reorganization, but the turnaround effort could be hampered by disgruntled product vendors, a bankruptcy expert said yesterday.

The credit line will be used only to pay for products during bankruptcy, not for vendor debt for products purchased before the company declared bankruptcy on Monday, Circuit City said in a Securities and Exchange Commission filing yesterday.

Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy law, said money owed to the vendors before Circuit City filed cannot be paid until it emerges from bankruptcy.

Vendors contacted by the Richmond Times-Dispatch yesterday about doing business with Circuit City either would not comment on their plans or did not return calls.

Hewlett-Packard Co. spokeswoman Ann C. Finnie said, “H-P is aware of Circuit City’s bankruptcy filing and will be managing its business with Circuit City appropriately given the news.”

Hewlett-Packard was listed as the largest creditor in Monday’s filing. Circuit City owes it $118.8 million.

“What I can tell you is that H-P is focused on delivering the best customer experience, which has long included allowing consumers to purchase technology products where and how they wish,” Finnie wrote in an e-mail. She did not respond when asked if Hewlett-Packard would continue to ship products to Circuit City.

Jeffrey L. Tarkenton, a lawyer representing computer-maker Gateway Inc., said yesterday that he had not confirmed that the company was making deliveries of its computer products to Circuit City. However, Tarkenton said, “I would expect that most vendors are going to start shipping.”

In an e-mailed statement last night, a Panasonic Co. spokesperson said, “It is unfortunate that Circuit City Stores Inc., one of the nation’s largest electronics retailers, has had to face this challenging situation. Panasonic hopes for Circuit City’s successful reorganization and recovery.”

At a hearing Monday, an attorney representing Panasonic said it would seek an injunction to prevent Circuit City from selling products that Panasonic had shipped to the retailer on a consignment basis. No request for an injunction could be found in a search of court records yesterday.

Circuit City owes Panasonic $13.2 million, according to bankruptcy filings.

The product vendors are owed a huge amount of money, said Gary Shapiro, president and chief executive of the Consumer Electronics Association, a trade group based in Northern Virginia that represents manufacturers, retailers and others related to the consumer electronics industry.

“What [the bankruptcy filing] does is it really hurts the people who sold product to Circuit City,” he said. “They will lose their money now when they really wanted Circuit City to survive. They stuck their necks out and gave them product.”

Circuit City has said it hopes to emerge from bankruptcy by March.

Shares of Circuit City, which are now traded over the counter after the New York Stock Exchange suspended its listing Monday, closed at 25 cents yesterday, up 12 cents. Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com

Contact Michael Martz at (804) 649-6964 or mmartz@timesdispatch.com.

Yes they are done, it’s a shame because I remember when Circuit City was oh so cool.

Circuit City Stores, Inc. to Reorganize Under Chapter 11– Circuit City Remains Fully Operational and Open for Business – - Company Has Negotiated a Commitment for $1.1 Billion in Debtor-in-Possession Financing – - Company Intends to Build on Recent Efforts to Streamline the Company and Create a Stronger, More Competitive Business -

November 10, 2008

RICHMOND, Va., Nov 10, 2008 /PRNewswire-FirstCall via COMTEX/ — Circuit City Stores, Inc. (NYSE: CC) today announced that it has filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia (“Bankruptcy Court”) in Richmond, Va. The company plans to continue operating the business without interruption as management focuses on developing and executing a comprehensive corporate restructuring plan. Circuit City’s Canadian operations also will be seeking protection under the Companies’ Creditors Arrangement Act in Canada (“CCAA”).

In conjunction with the filing, Circuit City is seeking customary authority from the Bankruptcy Court that will enable it to continue operating its business and serving its customers in the ordinary course. The requested approvals include requests for the authority to make wage and salary payments and continue various benefits for employees as well as honor customer programs such as returns, exchanges and gift cards. In addition, Circuit City has negotiated a commitment for a $1.1 billion debtor-in-possession (DIP) revolving credit facility to supplement its working capital. The DIP facility replaces the company’s $1.3 billion asset-based credit facility and is being provided by the same lenders. The facility provides additional immediate liquidity while the company works to reorganize the business and will permit the company to pay vendors and other business partners for goods and services received after the filing.

Circuit City recently announced that it was taking certain actions to address the company’s financial condition and deteriorating liquidity position. Despite aggressive efforts to secure vendor support, vendor concerns about the company’s liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably since the company provided a liquidity update on November 3, 2008, further impairing the company’s ability to conduct business and provide service to its customers. Faced with the need to secure ongoing vendor support and to ensure adequate merchandise flow to stores during the important holiday season, the company has determined that it would be in the best interest of its stakeholders to file for reorganization relief under Chapter 11. Operating under the protection of Chapter 11 will provide the company’s vendors with assurances that they will be paid for merchandise the company receives post-filing so the company can be sufficiently stocked for the holiday selling season. Further, the company intends to create a restructuring plan that should allow Circuit City to emerge as a stronger business with an improved national distribution channel for its vendors and a more compelling offering for its customers.

The company recognizes that, to achieve these objectives, there is a critical need to create a more efficient chain with a streamlined cost structure. As previously announced, the company is in the process of closing 155 domestic segment stores. This week, the company took action to realign its regional and district support structure commensurate with the smaller store base, which will include approximately 566 stores when the domestic segment store closings are completed. As a further cost-saving measure, the company reduced its corporate headquarters workforce on November 7, 2008. These corporate, regional and district support reductions totaled approximately 700 positions and are in addition to the reductions resulting from the store closings. The store closings and support workforce reductions will result in a combined domestic workforce and store base reduction of approximately 20 percent.

Under the protection of Chapter 11, the company plans to build on these recent restructuring initiatives. Through the additional flexibility that the bankruptcy process provides the company to restructure its operations, the company will continue its real estate rationalization by taking immediate steps to reject the leases at its previously closed locations. Further, as part of its restructuring efforts, the company will continue to assess the productivity of all assets, review additional cost-cutting initiatives and explore strategic alternatives to maximize the value of the business.

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.

How much time until life support is removed?