Circuit City to Go Out of Business After 60 Years
By Steven Church and Mark Clothier
Jan. 16 (Bloomberg) -- Circuit City Stores Inc., the bankrupt consumer-electronics retailer, will shut down all of its 567 U.S. stores after failing to find a buyer that would keep the chain in operation.
Great American Group WF LLC; Hudson Capital Partners LLC; SB Capital Group LLC; and Tiger Capital Group LLC won the right to liquidate the company’s assets in a court-sanctioned auction. Circuit City creditors are guaranteed to get the first 70.5 percent of the value of the $1.2 billion to $1.3 billion in inventory. Stockholders will probably get nothing, Circuit City said today in a statement.
Sales declined at Circuit City, once the biggest U.S. electronics retailer, as it lost market share to Best Buy Co., Wal-Mart Stores Inc. and online retailers. On Nov. 10, it filed for bankruptcy in Richmond, Virginia, after suppliers cut off credit and demanded cash up front for shipments. At the time, Circuit City, which employs more than 30,000 people in the U.S., planned to exit court protection as a going concern.
“You can’t ignore the economic backdrop,” said David Schick, a retail analyst at Stifel Nicolaus & Co. in Baltimore. “Had Circuit run into all these problems and had to go Chapter 11 in any other year, they wouldn’t have had this outcome.”
Best Buy jumped $2.11, or 8.1 percent, to $29.34 at 4 p.m. in New York Stock Exchange composite trading, the largest increase in a month. The Richfield, Minnesota-based company is the biggest U.S. consumer-electronics chain.
Going-out-of-business sales at Circuit City’s remaining U.S. stores will start tomorrow and end by March 31. The liquidation agreement, which was approved by U.S. Bankruptcy Judge Kevin R. Huennekens, comes a day after the company held an auction described in court papers as its last chance to survive bankruptcy as a smaller chain.
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