Circuit City Files For Chapter 11 Bankruptcy Protection

November 10, 2008 4:25 p.m. EST

Richmond, VA (AHN) - Circuit City Stores on Monday filed for bankruptcy protection as the electronics retailer continues to make moves to stay in business. Just last week the company announced it was closing 20 percent of its stores.

Due to the company's questionable financial position, vendors had become weary on whether they would be paid for products delivered to the retailer. With the holiday season approaching, Circuit City made the move to appease vendors rather than run the risk of being cutoff coming into the holidays.

The filing allows Circuit City time to reorganize while its creditors are put on hold. The company has had only one profitable quarter in the past year and continues to slash its expense structure to offset a weak retail sales environment.

Circuit City's Canadian operations, InterTAN, followed the lead of its U.S. parent and filed for bankruptcy protection in an Ontario court on Monday. However, InterTAN said all stores will remain open and staffed. The unit operates 772 electronics stores in Canada.

The company said it has secured $1.1 billion in financing to use as working capital while in bankruptcy protection. The move is vital for Circuit City as now it shows vendors it has capital to fund purchases.

In the company's filing, it said assets totaled $3.4 billion while liabilities were $2.32 billion as of Aug. 31.