Circuit City Liquidation Begins Saturday
By Alan Wolf -- TWICE, 1/16/2009
Richmond, Va. — Going-out-of-business sales began at Circuit City’s 567 remaining stores this weekend after a federal bankruptcy court approved the chain’s request to retain four liquidation firms.
The close-out specialists include Great American Group, Hudson Capital Partners, SB Capital Group and Tiger Capital Group. The court gave them until March 31 to sell off the retailer’s approximately $1.3 billion in inventory.
Circuit City had been in negotiations with two potential buyers, identified as Mexican investor Ricardo Salinas Pliego and Golden Gate Capital, a private equity firm, but neither was able to raise sufficient funding for the acquisition. A key sticking point, according to courtroom accounts by Bloomberg News, was lenders' demand that manufacturers ship Circuit merchandise on credit.
Given more time to negotitate a sale, the retailer could have reorganized as a smaller chain, a Circuit City attorney told the court. But the creditors committee, which includes key vendors, called off the negotiations after the company failed to provide any evidence that a sale was possible, Bloomberg reported.
The liquidators have been authorized to retain store employees as needed and provide retention bonuses of up to 10 percent, court documents show. They are also permitted to sell home-theater and 12-volt installation services up to 10 days before a store location closes.
Hudson, SB and Tiger also conducted liquidation sales for Tweeter.
Circuit City is still looking to sell its 765 Canadian stores as a going concern. Formal bids are expected by Jan. 23.
