Richmond, Va. — The Federal bankruptcy court here has approved Circuit City’s first day motions in yesterday’s voluntary filing for Chapter 11 reorganization.
The United States Bankruptcy Court for the Eastern District of Virginia, approved a $1.1 billion debtor-in-possession (DIP) revolving credit facility to supplement Circuit City’s working capital and provide additional liquidity while it works to reorganize the business, the retailer said.
The court also granted Circuit City authority to continue to make wage and salary payments, continue various benefits for sales clerks, and to honor customer programs such as returns, exchanges, gift cards and other pre-petition customer obligations.
“We are pleased to have obtained court approval for our first day motions, a critical first step in Circuit City’s reorganization process,” said James Marcum, vice chairman and acting president/CEO. “These approvals will help position us for a more successful holiday selling season and allow us to operate our business and serve our valued guests without interruption as we work to emerge from Chapter 11 as quickly as possible.”
Separately, the New York Stock Exchange (NYSE) has suspended Circuit City’s common stock following its Chapter 11 bankruptcy filing. The retailer’s common stock is now trading over the counter and is being quoted on the Pink Sheets service under the ticker symbol CCTYQ. The company said it intends to take appropriate steps to maintain an active trading market for its common stock but can provide no assurance that there will be an active trading market.
The NYSE previously notified the company that it was not in compliance with the exchange’s price criteria for trading because the average closing price of the company's common stock was less than $1/share over a consecutive 30-trading-day period as of Oct. 22. Circuit City said it does not intend to take any further action to appeal the NYSE’s decision, and it is expected that the common stock will be de-listed after the completion of the NYSE's application to the Securities and Exchange Commission.
Not being listed on the NYSE does not constitute a default under the company’s DIP revolving credit facility, Circuit City said.
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