Richmond, Va. — Circuit City is considering closing at least 150 of its 712 stores and cutting thousands of jobs to stave off a Chapter 11 bankruptcy filing before the holiday selling season, according to a report in today’s Wall Street Journal.
The newspaper, citing anonymous sources, said the retailer has retained bankruptcy counsel, a turnaround consultant, and is working with the Rothschild investment bank to help secure debtor-in-possession financing, which allows a company to pay for its day-to-day expenses while in Chapter 11.
Circuit City has had little success securing financing amid the tight credit market, and is looking at liquidating $350 million in inventory that would be freed up by the store closures, the report said.
The chain wouldn’t comment on the story, and reiterated that is conducting a comprehensive review of all aspects of its business, as acting CEO James Marcum indicated earlier this month.
The weak economy has put an added strain on already struggling retailers including Mervyn’s, Linens ‘n Things and Sharper Image, which all filed Chapter 11 bankruptcy protection this year and ultimately chose to liquidate their assets.
All eyes are also on Tweeter, which last week replaced its CEO of just over a year with a specialist on loan from a restructuring firm due to the “current extreme economic conditions and the company’s recent peformance,” chairman George Schultze said in a memo.
Clickhereto read TWICE's complete coverage of Circuit City and Tweeter.