(AFP) – Nov 10, 2008
WASHINGTON (AFP) — US electronics retailer Circuit City said Monday it had filed for bankruptcy protection and obtained a 1.1 billion dollar credit lifeline to battle a sharp decline in sales.
Circuit City became the first major retailer to file for Chapter 11 bankruptcy protection amid the escalating credit crisis and economic slowdown that is pressuring retailers ahead of the crucial year-end holiday shopping season.
"The company plans to continue operating the business without interruption as management focuses on developing and executing a comprehensive corporate restructuring plan," Circuit City said in a statement.
The Chapter 11 filing with a federal bankruptcy court in Richmond, Virginia, would protect the company from creditors as it tries to reorganize to survive.
Circuit City's Canadian operations also will be seeking protection under the Canada's Companies' Creditors Arrangement Act, the Virginia-based retailer said.
Circuit City said it had obtained a commitment from its creditors for a 1.1 billion dollar credit line to shore up its working capital base which replaces a 1.3 billion line of credit that had been based on the company's assets.
The beleaguered retailer announced a week ago that it would close 155 stores, or 20 percent of its domestic footprint, and take other restructuring measures to fight a growing cash crisis and an economic downturn that had decimated sales.
The company on Friday said it was cutting 700 jobs at its corporate headquarters and other operations.
Circuit City said Monday that the store closings and layoffs were aimed at reducing the company's domestic store base and workforce by approximately 20 percent.
The company operated 721 stores in 165 US markets on October 31; in Canada it operated 770 retail stores and dealer outlets on September 30.
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