Circuit City on Monday announced that it will file to reorganize under Chapter 11 in U.S. Bankruptcy Court. The company also said it plans to continue operations.
"Operating under the protection of Chapter 11 will provide the company's vendors with assurances that they will be paid for merchandise the company receives post-filing so the company can be sufficiently stocked for the holiday selling season," the company said in a statement. "Further, the company intends to create a restructuring plan that should allow Circuit City to emerge as a stronger business with an improved national distribution channel for its vendors and a more compelling offering for its customers."
"We recently have taken intensive measures to overcome our deteriorating liquidity position," the company's acting CEO, James A. Marcum, said as part of the announcement. "The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively. In the meantime, our stores remain fully operational, and our associates are focused on consistent and successful execution this holiday season and beyond."
