November 10th, 2008 by admin
Ailing electronics retailer Circuit City filed for Chapter 11 Bankruptcy Protection on November 10, 2008. Executives released the news on November 5th that they would be closing 155 stores across the US. Under the Chapter 11 filing, they are going to keep the remaining stores open in hopes to make it out of bankruptcy.
Circuit City is currently the 'No. 2' electronics retail chain behind Best Buy. They have been hit hard by the recent economic downturn and competition from Walmart and other large discount stores. Another bad move was when they axed 3,000 of it's higher paid sales staff. They replaced them with lower paid workers with less experience and knowledge of the items in the store. Many customers don't feel that comfortable buying a $2,000 piece of equipment from a 'kid'.
Circuit City will be having liquidation sales in the 155 stores pegged for closing only. Chapter 11 is only a 'reorganization' plan of bankruptcy that is usually the first choice in trying to get a business back on it's feet. While many stores made it out of Chapter 11 in the past, it doesn't seem that way lately. There is always a possibility that they will not be able to turn around the business and might liquidate and dissolve the chain. That's always the last option.
Circuit City will be asking the bankruptcy courts to allow them to honor and sell Gift Cards and will also ask them to continue to take credit card payments. More than likely this will be approved and 'us' the 'consumer' will not really notice any difference.
While you might be shopping at Circuit City during their Chapter 11 process...you might want to remember a few things:
-A Circuit City 'warranty' could be voided if they decide to close the chain.
-Gift Cards more than likely will be honored, but if they liquidate the chain, they will be useless.
-Returns will still be honored, with the exception of any store offering 'liquidation' sales.
-Don't apply for the Circuit City credit card right now, even if they offer to sign you up. While most retail credit cards are not owned by the chain itself...accounts could be sold and interest rates could be impacted.
