Circuit City has begun liquidation sales at its remaining 567 U.S. stores, meaning the company will not be coming out of bankruptcy as hoped.
Last month, the giant retailer, which employs over 30,000 US workers, filed for Chapter 11 bankruptcy protection after suppliers cut off most credit.
The company estimated its remaining inventory at $1.3 billion and said creditors will receive 70.5 percent of all revenue from the liquidation. Stockholders will get nothing.
The liquidation sales will end on March 31st when the company completely goes out of business.
“Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders,” James A. Marcum, the current CEO added.
Result for: bankruptcy protection
According to an attorney for the company, Circuit City sales have fallen 50 percent since the electronics chain filed for Chapter 11 bankruptcy over a month ago.
The company had projected a decline of 28 percent and had forecasted that projection into their budget. Yesterday, the court approved a $1.1 billion USD revolving credit line for the retailer in hopes that it can get out of Chapter 11.
Circuit City spokesman Bill Cimino added that the weak sales “should not be considered a negative,” considering the economic recession. He also noted that the company was improving its gross margin rate which was helping offset the sales decline.
Not everyone sees the numbers as a positive however. Retail consultant and investment banker Howard Davidowitz said it would be nearly impossible for the company to get out of bankruptcy protection given the harsh terms of the loan and the “collapse” of the retailer’s customer base.
Result for: bankruptcy protection
Just days after being hit with one of the largest fines in copyright infringement history, a lawyer for the now dead torrent search engine TorrentSpy has said the business is bankrupt and they will not be able to pay the fine.
The fine, $110 million USD, was ordered two days ago by a judge, following a high profile case brought forth by the Motion Picture Association of America (MPAA).
Because the site refused to turn over any internal documents the judge also ruled that the site can never go online again.
According to attorney Ira Rothken the owners of TorrentSpy have filed for bankruptcy protection in England “and have no appreciable assets.”
“This was a Hollywood publicity stunt,” Rothken added.
While the site is set to appeal the ruling, the MPAA says it is still going to go after the cash and hopes the ruling will serve as a reminder that they are still on the prowl.
