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Circuit City's negotiations with potential buyer break down, company plans to liquidate
By E. Janene Geiss
Philadelphia, Jan. 16 - Circuit City Stores, Inc. announced Friday that it will seek approval in bankruptcy court to begin liquidating its assets.
That decision comes after the company was unable to come to terms with interested parties on a going-concern transaction, according to a company news release. That transaction would have provided financing to sustain its operations, restructure through reorganization or allow for purchase of the company or all or substantially all of its assets.
"We are extremely disappointed by this outcome," James A. Marcum, vice chairman and acting president and chief executive officer, said in the statement.
Going-out-of-business sales were scheduled to start Saturday at all 567 of the company's stores.
About $1.8 billion in inventory will be liquidated, said Great American Group, LLC, which, along with SB Capital Group, LLC, Tiger Capital Group, LLC and Hudson Capital Partners, LLC, will hold the sales.
Company officials said they do not anticipate any value will remain from the bankruptcy estate for the holders of the company's common equity. However, this will be determined in continuing bankruptcy proceedings, they added.
Attorneys for Circuit City did not return telephone calls seeking comment.
The asset liquidation process is expected to start soon absent any further amendment to Circuit City's debtor-in-possession credit agreement deadlines. Based on the company's statement, no other options are being explored.
"This is the only possible path for our company," Marcum said.
Last week, company officials called the sale discussions "significant" and the buyers "highly motivated."
The Richmond, Va., electronics retailer has 30,000 employees. It filed for bankruptcy on Nov. 10 in the U.S. Bankruptcy Court for the Eastern District of Virginia. Its Chapter 11 case number is 08-35653.
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