Circuit City Stores Inc., the No. 2 electronics seller, filed for bankruptcy protection Monday, thus becoming the latest retailer hurt by a worsening economic downturn.
According to the company's Chapter 11 filing with the U.S. bankruptcy court in Richmond, Va., Circuit City (CC, Fortune 500) will continue to do business and pay its workers while it restructures debt and its business operations.
Just last week the Richmond-based company announced that it would close another 150 stores and cut about 17% of its domestic workforce as it continues to face eroding sales at its stores.
The company said it has negotiated a commitment for a $1.1 billion "debtor-in-possession" (DIP) revolving credit facility to supplement its working capital. The company said the DIP credit will replace the company's $1.3 billion asset-based credit facility provided by its lenders.
"We recently have taken intensive measures to overcome our deteriorating liquidity position," James Marcum, Circuit City's acting president and chief executive officer, said in a statement.
"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," he said.
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