Circuit City files for bankruptcy protection

Circuit City made the filing today:

Circuit City Stores, the struggling electronics retailer, filed for bankruptcy protection on Monday, becoming one of the biggest, best-known corporate names to collapse amid the faltering economy. …

Retailers have been especially hard hit by the slowdown in consumer spending and the clampdown in the credit markets. Circuit City announced last week that it was closing 155 stores and laying off 17 percent of its work force, or about 1,300 employees. …

The company said in its filing that it is seeking the court’s permission to obtain $1.1 billion in debtor-in-possession financing. Together with about $400 million remaining from a $1.3 billion credit line obtained before the bankruptcy filing, Circuit City said that it should have enough financing to make it through the holiday shopping season.

There will be a wave of corporate bankruptcies this year and next as overlevered companies that can’t service their debt find no one is willing to roll it over.  And the fact that debtor-in-possession financing has been harder to come by could mean many bankruptcies will be very messy.

Posted in bankruptcy, credit crunch, stocks |