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Monday, October 20, 2008

Circuit City to Close Stores, Cut Thousands of Jobs

FOXBusiness

Circuit City, the second largest electronic retailer by sales, plans to cut thousands of jobs and close at least 150 stores, according to the Wall Street Journal.

Circuit City would make these cutbacks instead of filing for bankruptcy-court protection, according to people familiar with the matter. However, earlier this month the company retained the law firm Skadden, Arps, Slate, Meagher and Flom LLP as its bankruptcy counsel. This firm oversaw Kmart’s Chapter 11 reorganization several years ago.

FTI Consulting was also retained by Circuit City to assist in the development of a turnaround plan and to help secure emergency financing with banks, according to the Journal.

Circuit City has also explored liquidation options recently, and is investigating how much money could be raised from selling millions of dollars worth of inventory, according to the Journal.

Circuit City is particularly trying to avoid bankruptcy before the holiday season for fear that customers might worry about warranty guarantees on items like flat screen TVs and Laptops, according to the Journal.

The company, which hasn’t had a profitable quarter in over a year, employs 45,000 people and has been in business for 59 years.