Circuit City files for bankruptcy protection

New York: Electronics retailer Circuit City Stores has fallen victim to the current financial crisis and has filed for bankruptcy protection.

Circuit City has filed for protection under Chapter 11 of the US Bankruptcy Code in the Federal Bankruptcy Court in Richmond, a statement issued by the company said.

Circuit City in recent times was battered by increasing competition from its rivals, including credit conditions.

The Richmond-based retailer's move to file for bankruptcy protection comes close on the heels of the company announcing that it would cut about 17 per cent of the workforce and also shut down stores.

It has also negotiated a credit facility worth $1.1 billion to supplement its working capital.

"The facility provides additional immediate liquidity while the company works to reorganise the business and will permit the company to pay vendors and other business partners for goods and services received after that said.

"The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively," James A Marcum, Circuit City's vice chairman and

acting president and chief executive officer said.

"The company plans to continue operating the business without interruption as management focuses on developing and executing a comprehensive corporate restructuring plan.

Circuit City's Canadian operations also will be seeking protection under the Companies' Creditors Arrangement Act in Canada," the firm said in a statement on Tuesday.