After filing for bankruptcy protection in November, Circuit City was hopeful that it would be able to reorganize and reemerge. Now, only a day after the company held an auction that was suppose to be the retailer’s last chance to survive bankruptcy as an intact, though smaller chain, the company announced it has hired four liquidators to sell all remaining merchandise in 567 stores before going out of business for good.
While some people will certainly be excited about the potential to pick up electronics, TVs, and computers at closeout prices, the news is certainly grim to all of the company’s 34,000 employees. Circuit City said it will give employees 60 days notice before termination. Those who remain with the company to assist with the liquidation will receive pay and benefits. In addition to the loss of many jobs, the closing of Circuit City will result in fewer brick-and-mortar electronics stores for many consumers to shop for new gadgets.
"We are extremely disappointed by this outcome," James Marcum, acting CEO for Circuit City, said in a statement. "We were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company."
Circuit City was the biggest electronics retailer in the U.S. until the mid-1990s when it lost share to other retailers such as Best Buy, Wal-Mart, and Amazon.com. Circuit City also operates about 765 retail stores and dealer outlets in Canada. The company said its Canadian operations will continue.
U.S. Bankruptcy Judge Kevin Huennekens had given the company permission to liquidate if a buyout was not achieved. However, the company still needs final approval of liquidation from the court. With court approval, the liquidation sale is to begin Saturday and run until March 31. The retailer's Web site and call center will cease to operate after Jan. 18.
Update: A federal bankruptcy judge approved Circuit City’s liquidation request, so the going-out-of-business sales will start tomorrow.