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 user 2009-01-19 at 11:24:04 am Views: 75
  • #21002

    Circuit City to liquidate remaining US stores
    Circuit City Stores Inc., the nation’s second-biggest consumer
    electronics retailer, said Friday it failed to find a buyer and will
    liquidate its 567 U.S. stores. The closures could send another 30,000
    people into the ranks of the unemployed.”This is the only possible path
    for our company,” James A. Marcum, acting chief executive, said in a
    statement. “We are extremely disappointed by this outcome.”The company
    had been seeking a buyer or a deal to refinance its debt, but the
    hobbled credit market and consumer worries proved insurmountable.The
    liquidation of Circuit City is the latest fallout from the worst
    holiday shopping season in four decases. People have slashed their
    spending since the financial meltdown in September as they worry about
    their job security and declining retirement funds.Other recent
    casualties include KB Toys, which filed for bankruptcy in December and
    is liquidating stores. Department store chains Goody’s Family Clothing
    and Gottschalks Inc. both filed for bankruptcy this week — Goody’s
    plans to liquidate, while Gottschalks hopes to reorganize.Industry
    experts expect more bad news in the coming months as spending likely
    will deteriorate further.

    Circuit City said in court papers it
    has appointed Great American Group LLC, Hudson Capital Partners LLC, SB
    Capital Group LLC and Tiger Capital Group LLC as
    liquidators.”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,” Marcum said.Shareholders are likely to
    receive nothing, as is typical in bankruptcy cases. It was unclear what
    would happen to the company’s 765 retail stores and dealer outlets in
    Canada.”Very, very sad,” said Alan L. Wurtzel, the son of company
    founder Samuel S. Wurtzel, and the chief executive from 1972 to 1986,
    board chairman from 1986 to 1994 and vice chairman until 2001. “I feel
    particularly badly for the people are employed or until recently were

    Wurtzel has previously said Circuit City didn’t take
    the threat of rival Best Buy Co. seriously enough and, at some points,
    were too focused on making a profit in the short term instead of
    building long-term value.Circuit City filed for Chapter 11 bankruptcy
    protection in November as vendors started to restrict the flow of
    merchandise ahead of the busy holiday shopping season.It had been
    exploring strategic alternatives since May, when it opened its books to
    Blockbuster Inc. The Dallas-based movie-rental chain made a takeover
    bid of more than $1 billion with plans to create a 9,300-store chain to
    sell electronic gadgets and rent movies and games. Blockbuster withdrew
    the bid in July because of market conditions.

    Circuit City,
    which said it had $3.4 billion in assets and $2.32 billion in
    liabilities as of Aug. 31, said in its initial filings that it planned
    to emerge from court protection in the first half of this year.Under
    court protection, Circuit City has broken 150 leases at locations where
    it no longer operates stores. The company already closed 155 stores in
    the U.S. in November and December.U.S. Bankruptcy Judge Kevin
    Huennekens had given the company permission to liquidate if a buyout
    was not achieved. The company still needs final approval of a
    liquidation from the court.

    The liquidation is the latest big
    blow to the nation’s malls, which have suffered from a rise in
    vacancies as a slew of chains from Mervyns LLC to Linens ‘N Things have
    liquidated. But analysts say that the demise of Circuit City, whose
    stores range in size from 20,000 to 25,000 square feet, will hurt the
    fortunes of mall operators even more.”It will bring to market a glut of
    big box spaces across the country,” said John Bemis, head of Jones Lang
    LaSalle Inc.’s retail leasing team. “It will have one of the largest
    impacts on big box real estate across the country.”