Bankrupt electronics retailer Circuit City Stores has said it will liquidate its assets and shutter hundreds of U.S. stores after failing to reach a deal to sell the company.
AFP - Electronics retailer Circuit City said Friday it would liquidate all its 567 US stores after failing to restructure the company, throwing the future of its 30,000 workforce into uncertainty.
The action came after the company based in Richmond, Virginia, filed for bankruptcy protection in November, the first major retailer to file for Chapter 11 amid a prolonged recession.
"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 to structure a going-concern transaction in the limited timeframe available," said James Marcum, chief executive officer for Circuit City Stores.
"And so this is the only possible path for our company," he said in a statement. "We are extremely disappointed by this outcome."
Circuit City's operations in Canada, where it has about 765 retail stores and dealer outlets and employs about 3,000 people, will not be affected by the US action, the company said.
In announcing its bankruptcy filing action in November, the company had said it obtained a commitment from its creditors for a 1.1 billion dollar credit line to shore up its working capital base.
But the deteriorating economic situation has dampened retail sales.
Latest data show retail sales fell for the sixth straight month in December in a sharp consumer pullback. Retailers had hoped of some recovery during the recent holiday season but to no avail as consumer spending continued to shrink.
"We had hoped to be able to emerge from Chapter 11 bankruptcy protection as a stronger, more competitive company and we made significant progress during the reorganization to improve our business," Circuit City said.
"Unfortunately, the economic climate is so poor that we have no choice other than liquidation."
Liquidators are to start arriving at stores across the United States over the weekend, and closing sales will start as early as Saturday and expected to wrap up by the end of March, the company said.
Date created : 2009-01-16