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Circuit City Seeks Bankruptcy

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By MICHAEL FELBERBAUM and VINNEE TONG

The Associated Press

Published: November 11, 2008

RICHMOND, Va. - Circuit City Stores filed for bankruptcy protection Monday, heading into the busy holiday season hoping the move will help the nation's second-biggest electronics retailer survive.

The company said it made the filing because it was facing pressure from vendors who threatened to withhold products during the holiday period. The company also said it cut 700 more jobs at its headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.
Circuit City corporate communications representative Jim Babb said there are no plans for store closures beyond those announced last week. Those include seven stores in Florida, but none in the Bay area. There are no plans for any additional layoffs of store personnel, he said Monday.
Circuit City filed for Chapter 11 protection, which will allow it to keep operating while it develops a reorganization plan. Its Canadian operations also filed for similar protection.

In court documents, Chief Financial Officer Bruce H. Besanko cited three factors: erosion of vendor confidence, decreased liquidity and the global economic crisis.

"Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders," Besanko said in the filing.

Shares in Richmond, Va.-based Circuit City fell 14 cents, or about 56 percent, to 11 cents Monday before trading was halted.

Tribune reporter Michael Sasso contributed to this report.

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