Thursday, February 19, 2009
By Erik Gruenwedel | Posted: 16 Jan 2009
Expect to see more people on street corners waving ‘liquidation’ signs after bankrupt Circuit City Jan. 16 said it would cease operation of its remaining 567 U.S. stores.
It wasn’t immediately clear what would happen to the Richmond, Va.-based No. 2 consumer electronics retailer’s 765 stores in Canada.
Circuit City Friday notified about 30,000 U.S. employees that their positions would be eliminated.
"This is the only possible path for our company," said James Marcum, Circuit City's acting CEO, in a statement. "We are extremely disappointed by this outcome."
The chain, which filed for Chapter 11 protection last year and liquidated 155 stores at the time, said it would shutter the remaining stores if it couldn’t find a buyer.
This week Circuit City officials had been cautiously optimistic that two potential buyers would take over and continue a downsized operation. The chain had also solicited third-party bids for select assets and inventory.
Mexican billionaire Ricardo Salinas Pliego, who owns a chain of electronics stores in Latin America, and a private equity firm had reportedly been attempting to purchase the company. They apparently couldn't secure the necessary financing or support from vendors.
According to a filing with U.S. Bankruptcy Court in Richmond, Circuit City retained Great American Group, Hudson Capital Partners, SB Capital Group and Tiger Capital Group as liquidators, which are slated to begin store clearance sales Jan. 17.
Under terms of the liquidation process, Great American and others guarantee to pay Circuit City at least 70.5% of the inventory's wholesale cost plus expenses.
Woodland Hills, Calif.-based Great American oversaw liquidations of Tower Records and Musicland retail chains. It, along with the others, now assumes responsibility for all employee, utility, insurance and related expenses during the store closures.
"Very, very sad," Alan Wurtzel, son of Circuit City founder Samuel Wurtzel and former CEO, told The Associated Press.