Circuit City Files For Bankruptcy

Circuit City has filed for chapter 11 bankruptcy. According to their press release, this will allow them to undergo corporate restructuring, cut costs, get out of leases and figure out a way to still make a go of it. The stores will continue to operate, and they will seek to still allow for returns, exchanges, and gift cards.

Circuit City, Electronics Retailer, Seeks Bankruptcy [Bloomberg] (Thanks to Ken!)
Circuit City Stores, Inc. to Reorganize Under Chapter 11 [Press Release] (Photo: corsec67)

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  1. discounteggroll says:

    as long as I can still buy gift cards, I’m a happy camper

    =/

  2. CRNewsom says:

    Raise your hand if you didn’t see this one coming.

  3. Ouze says:

    I thought that when they closed the stores, they’d be done in a year. I didn’t realize that was, like, 11.5 months of overestimation.

    • Traveshamockery says:

      @Ouze: Chapter 11 bankruptcy isn’t the same as going out of business. It’s very common for businesses to restructure then emerge successfully from Chapter 11.

      A lot of current airlines were in or are in Chapter 11.

      • SabreDC says:

        @InfiniTrent: And we’re still waiting for one of them to emerge successfully…

        • Stanwell says:

          @SabreDC: K-Mart and K-B Toys have both been in Chapter 11 in recent years, and both have come out and are still in operation. Both took an infusion of outside cash to do so if i’m not mistaken, but still.

        • Traveshamockery says:

          @SabreDC: I’m just giving examples of businesses continuing to operate as usual under bankruptcy protection.

          • SabreDC says:

            @InfiniTrent: And I’m just making a bad attempt at a joke pertaining to the use of the word “successfully” in your post. Please don’t hold my lame attempt at humor against me. :-)

            You are correct though. Many companies go through Chapter 11 and continue operating.

  4. mbd says:

    The question is whether or not they will accept all those gift cards they sold before bankruptcy.

    • DrRonster says:

      No gift cards for anyone this year. Just giving crisp gift cards called cash. Can go anywhere to redeem or not.

      • Outrun1986 says:

        @SalenaBabblerash: After the Toys R Us debacle last year (their gift card machines went down on Dec. 26th). I would give cash instead of gift cards this year. Gift cards are no fun if you aren’t able to get the toy or game you wanted on the day your parents take you to the store!

    • Traveshamockery says:

      @mbd: If you read the article, the answer is yes, they’ll continue to operate as normal (including gift cards).

  5. Parting says:

    Kind of predictable at this point. When Sony recalls products, destined to you, you’re pretty much doomed.

  6. zigziggityzoo says:

    I hope the big three follow suit.

    • jdhuck says:

      @zigziggityzoo: While I don’t hope for it, I do mirror your sentiments.
      Years of mismanagement and blatant disresepect for consumers will finally takes it toll.
      I would caution the foreign auto-makers that do business in the US to take this as an example of not to operate.

      Especially ‘saved by zero’.

    • Traveshamockery says:

      @zigziggityzoo: Yeah, millions of lost jobs won’t cause any problems.

      • zigziggityzoo says:

        @InfiniTrent: The beauty of Chapter 11 is that the company can still operate without respect to its shareholders or unions, meaning a good majority of jobs can be kept, albeit at a lower salary, and the Big 3 can dump their “Job Bank” (7000 employees on the payroll doing nothing but sitting in the break rooms simply because it’s in their contract).

        Chapter 11 could save the Big 3, and save their employees jobs, too.

        • Traveshamockery says:

          @zigziggityzoo: Yeah, I know. For some reason, I took the comment as wishing for them to go out of business, not to file Chapter 11. Chalk it up to my response above where I made the exact same point you did. I was projecting, apparently :)

    • GundamAC197 says:

      @zigziggityzoo: No, no you don’t. you think you do, but you don’t.

      Less competition in the market is BAD. If all that’s left are online retailers like NewEgg and TigerDirect, there’s nothing keeping them from raising their prices.

    • thrashanddestroy says:

      @zigziggityzoo: All this anti-automotive bullshit is just that, bullshit.

      You want to find someone to blame, take a look at the consumer who has been demanding nothing but overpriced gas hogs of SUVs and pickups for the last ten years. There’s been fuel-efficient compact cars on the lots since most of you were in drivers ed, you just couldn’t see them behind the thirteen rows of Lincoln Navigators and Ford F-250s.

      Its called supply and demand, jackasses with too much cash to burn want the big boy on the block and the dealerships stock nothing but, guess what kind of production goes up? If anyone deserves a bailout, its the automotive companies…you know, what with carrying the economy for as long as it has.

      • xip says:

        @thrashanddestroy:

        Most of the compact cars that the big 3 sold over the last 10 years are junk. The foreign compact cars were much nicer. Also, the big 3 really pushed SUV and truck sales because those vehicles had a high higher profit margin. When I think back to the ads I saw while watching football yesterday, I remember Honda Accord, Nissan Versa, and big 3 TRUCKS TRUCKS TRUCKS! When is the last time you saw a commercial for a Chevy Cobalt?

  7. eXo says:

    I went to buy a game from them on friday which was supposed to come with a 3rd party gift card (xbox live points). They were out however, and substituted it with their own GC. So I took my bag out to the car, went back in and bought another game. This one also ended up coming with a gift card. So again, I dropped the game off in my car and went back in to find something else.

    During the third checkout process the one cashier on duty asked why i kept coming back in. I explained that I felt the need to spend the gift cards ASAP. When she asked why, I explained very blatantly, ‘because i doubt you’ll be in business much longer’

    She looked like she had been hit by a truck.

    At least I gave her fair warning…lol

    • melloncollie128 says:

      @exo:
      Way to go dick.

    • zigziggityzoo says:

      @exo: That’s priceless. I had a similar experience at CompUSA about a year ago.

      Makes me wonder though, what the heck is Best Buy doing right? Because I’ve always hated them the most.

      • crabbyman6 says:

        @zigziggityzoo: I couldn’t agree more. I’ve never had a bad experience at CC, but have had many at Best Buy, what’s the difference?

        • bnet41 says:

          Best Buy always seemed more organized to me. It was always easier to browse, and it felt like they were getting more out of their floor space.

          I always felt like Circuit City had a smaller selection, and were less “fun” to shop

        • Outrun1986 says:

          @crabbyman6: Best buy actually has registers that:

          1. You can find. How many times have I been wandering around in CC looking for the register, its just not labeled clearly?

          2. Staffed. They have many registers that are staffed, CC apparently doesn’t know how to staff a register. CC also only has 1 register open, if you are lucky. An unlucky person will spend 30 min looking for an employee to run that register so the customer can give CC their money for the item.

          They also have a customer service center that you can find and that’s also staffed. They also make an effort to get people through the customer service desk so you are not waiting for 30 min-1 hour while an employee is in the back “doing something”.

          Everything in BB is clearly labeled and more organized which makes the shopping experience better, now whether or not they give you service on that extended warranty you bought is another story…

          • frodo_35 says:

            I went to a best buy once. I was price shopping for a laptop. It was around xmas time and they had some bizzare chute like line to go into the computer dept. You had to wait for an employee to escort you I guess to push around the stupid and upsell crap you don’t need. I actualy stood in line for like 2 minutes before I came to my senses and walked out swearing to never again return. Have’nt been back. It felt like a russian toilet paper line in the 70s.

            • endless says:

              @frodo_35:

              that is why they are in business.

              setups like that aren’t common on normal days, but on high importance days they don’t surprise me.

              CC and BB dont make any money on cheap computers. they have to attach things to them if they want to stay open. hence why setups like that happen

      • MissPeacock says:

        @zigziggityzoo: I think BB has a better store layout. They also don’t make it hard to find the things that are on sale, like they do at CC. I’ve also never seen a shortage of workers at BB, whereas I’ve gone into CC and not seen anyone around when I needed help finding the items that were on sale. I’ve only bought small-ticket items at both stores (like CDs or DVDs), so I can’t speak to what their service is like in other areas.

      • Traveshamockery says:

        @zigziggityzoo:

        what the heck is Best Buy doing right?

        They’re making money.

        Seriously, BB has the following things going for them:
        1) More stores
        2) Better locations (lots of CCs were built in the 80s and 90s, in areas of cities that aren’t high traffic anymore)
        3) Better marketing/brand image. Can anyone deny this?
        4) Aggressive expansion plans

        I could go on and on. They’re just a more effective company, period.

        And contrary to popular belief around here, the vast majority of people have never had a problem at BB.

        • buckfutt says:

          @InfiniTrent:

          I wouldn’t go so far as “never had a problem,” but BB has a much better product selection and generally better pricing than CC. And while the blue shirts aren’t exactly a Mensa convention, they aren’t openly lazy and uninterested in customers, a la CC the last couple of years.

          But I only shop either place for loss leaders, and then rarely. YMMV.

  8. Anonymous says:

    I hate chapter 11’s. This gives this dieing company the unfair advantage of not having to pay their debts and keep product they can’t pay for coming into their store. This is totally unfair to retailers with good business sense who can pay their debts. Now cc can get an unlimited amount of product to try and trounce competition one last holiday season. Chapter 11 should be denied and chapter 7 instituted thus liquidating all in the company and paying debtors. Basically, killing the company. Sometimes you gotta tie a tiger to a tree and bash it with a shovel.

  9. SomeoneGNU says:

    While it is generally a bad thing but isn’t this the best chance Circuit City has left? By doing this they might possibly delay or even stop going out of business down the road?

  10. OminousG says:

    Circuit City, the K-Mart of technology.

  11. Psychosocial says:

    We don’t need CC anyway. Adios CC!

  12. QuanikaJulisa says:

    Hurrah! I’d be even happier if it were chapter 7 bankruptcy.

  13. MrGutts says:

    I want to know how many golden umbrellas are to be given out for running this company into the ground. Oh and how BIG $$$$$$$$$ are those umbrellas.

  14. synimatik says:

    I think something everyone who is applauding this should keep in mind is when/if CC goes into the crapper, that makes ALL experiences at Best Buy even worse. CC is and always has been their biggest brick and mortar competitor.

  15. NefariousNewt says:

    You’d never know it the way we’ve been getting coupons and circulars in the mail from them. I’m thinking it was unrealistic to think they could compete against Best Buy, given most of their stores are small and not well stocked with variety.

  16. Triborough says:

    That was quicker than expected.

  17. Murph1908 says:

    If only this bankruptcy could make their new commercial stop, stop, stop.

    The creepy guy and the female TV he takes home make me want to gouge my eyes out.

  18. Anonymous says:

    GOOD may they die a death of a thousand swords!
    .
    Anyone remember this from the Spring of this year? Seems payback is a REAL you know what!!!
    .
    Circuit City Stores’ (CC) decision to lay off 3,400 employees in order to hire lower-paid replacements is raising questions about the impact of severe cost-cutting on employee morale.
    .
    The consumer electronics retailer announced Wednesday that it was immediately firing store associates “who were paid well above the market-based salary range for their role.” New workers will be paid less, although Circuit City did not reveal the pay of the workers.
    .
    Laying off workers who earn higher pay raises the risk of deflating the morale of employees who are left behind, says Penelope Trunk, author of Brazen Careerist: The New Rules for Success.
    .
    “People left behind are probably thinking they don’t have a future there,” Trunk says.

  19. vdragonmpc says:

    Well the sunday paper had a front page article on Circuit City ‘regrets’… They said they were unsure of if they would go the bankruptcy route but a lot of quoted folks in the article said they were in the express lane. Funny how right they were.

    How stupid are the CEOs and boards of these companies? Circuit City is local to Richmond VA. When they burned the commissioned salespeople people here dropped them for that. Then they stopped carrying applainces and that killed them as they tried to add EB games to the inside of their stores. That didnt help as the earnings from young folks just wasnt there like it was with older people buying large ticket items from trained staff.

    Then they fired everyone that “made too much money”. The backlash locally was easily seen. The parking lots are empty as are the stores. No one in the store is trained or informed and actually buying a product is an adventure. Most of the times the cashier in Colonial Heights isnt at the register she is stocking shelves.

    Companies keep cutting their products and services and wonder why people go elsewhere. Your cheese doesnt have milk anymore well Ill just go get the one that does! Heck I used to like Hardees but the food is horrible now and expensive. I can go to a regular restaurant for what lunch costs there. Its odd almost like places dont want customers anymore.

    • thebluepill says:

      @vdragonmpc:

      Ditching their commision sales staff was their biggest, most fatal mistake.

      Yes, some of these people were making $75K a year, but they were only pulling 1-4% of the products sales price as commision, the store was never taking a loss…

      Greed did it.

  20. ShirinDirce says:

    A couple weeks ago, my girlfriend bought an LCD flat screen from them and did the credit thing for zero interest until 2010… are creditors going to come calling on her or what?

    • kamel5547 says:

      @ShirinDirce: 0% deals are finaced to third parties not through CC (or any other company). Even 0% auto loans are through a different entity, so the retail operation going under has no effect on the loans. The retail operation is paid cash immediately for the sale, although I would *guess* at a discounted rate agreed upon ahead of time (to support the 0% financing, I have no idea what that breakdown would be though).

    • BeeBoo says:

      @ShirinDirce: What kamel5547 said, but double check the paperwork to see whom the debt is actually owed to. [They can’t go back and change the terms anyway.] I would be more concerned about any warranty and who services that.

    • hegemonyhog says:

      @ShirinDirce:

      Circuit City is financed through Chase, so the debt should still be held under the normal terms.

  21. AllenK says:

    I hate to see almost any company file bankruptcy,but why couldn’t it be Best Buy instead?? I so prefer going to Circuit City over Best Buy. Believe it or not, my customer service experiences at Circuit City have been very positive. I can’t say that for Best Buy,but that’s an all day rant.

    The last thing I bought from C.C. was my Canon SD 870IS camera. They had the lowest price on the camera of all the brick and mortar stores. A few online retailers were cheaper,but I decided to go with them for the ease of return if needed. I ordered it online for store pickup,and away we went. The young lady who helped my wife look at cameras was extremely helpful to her as well.

    The news about GM possibly filing is much worse than this though.

    • balthisar says:

      @AllenK: This, too, is what I always liked about Circuit City. Internet purchasing with instant gratification (if you *need* something [or just want it badly enough, a few small extra percent doesn’t matter). Never had to talk to the sales drones or get the warranty pitch.

  22. ajc308 says:

    I have a laptop that I bought from Circuit City and is still under warranty. This weekend, water was spilled on it so I brought it to Firedog for repairs. They still have my laptop now, should I be worried about this?

  23. Optimistic Prime says:

    @zigziggityzoo: I think it has to do with the way they treat their employees. Not too long ago they basically fired everyone and hired anew. Why? Because they wanted to unionize. That’s never a good thing to do, especially in blue-collared areas like Ohio.

  24. Snarkysnake says:

    “I want to know how many golden umbrellas are to be given out for running this company into the ground.”

    That’s a pretty good question. Not to be nitpicky , but the phrase is “Golden Parachute”. Anyway ,you can be sure that the same executive team that fucked over the experienced sales force (the true beginning of the end for this company) ,will take care of themselves quite nicely. There will be a “Retention Program ” that will keep the smarter ones around until they can pick what meat remains on the carcass. There will be bankruptcy proof trusts set up to guarantee that the CEO and his cronies will be sipping margaritas on the beach long after Circuit City is just a Wikipedia entry.

    But it will not be all “good news”. There will be divorces,suicides,domestic strife (as unemployed couples take out their frustrations on one another) and of course,bankruptcies and repossesions,dreams deferred,dreams denied… All because the greedy bastards at the top of this company coudn’t see what was obvious to everyone with a lick of common sense: The company’s business model sucked. Selling goods at a loss while trying to make a profit on worthless warranties and service plans is just fucking stupid.

    I truly feel sorry for any good CC employees reading this. but for the ones with larceny in their heart : Paybacks are hell…

  25. reviled says:

    Less competition in any market is generally bad for the consumer so I hope they do not fail completely as that will only leave Best Buy and Walmart as major, national, brick and morter players in the consumer electronics biz.

  26. eXo says:

    It seems that there are some unhappy employees in their ad department, as anonymous emails are rounding the black friday site revealing their doorbusters and other loss leaders already.

    “listen all you all its sabotage!”

  27. Corporate-Shill says:

    Higher Prices,

    Higher Prices,

    Higher Prices at Best Buy and Newegg.

    Everybody sing along.

    Higher Prices,

    Higher Prices,

    Higher Prices at Best Buy and Newegg.

    Wash and Repeat as needed.

  28. waybaker says:

    I really hope that if Circuit City cannot emerge from this, that Fry’s or Microcenter take this as an opportunity to expand into Circuit City’s old territories.

    I think both of these stores hold potential to be major competition to Best Buy and competition is always a good thing for the consumer.

  29. ogman says:

    This just makes me really, really happy!

    • SomeoneGNU says:

      @ogman:

      Nothing like people losing jobs and maybe ever their homes. Oh maybe someone will kill themself rather than cope with the reality of being jobless in a poor economy.

    • captainfrizo says:

      @ogman: @ogman:

      If CC folds my brother will be out of his job, which is anything but a really, really happy thing to experience. Have some class. Or at least pretend to by not posting such non-sense.

  30. joellevand says:

    @snarkysnake: the CEO that ran the company into the ground is already gone; resigned a couple of months ago IIRC.

  31. Anonymous says:

    Seriously I don’t even know why people shop at Best Buy when they can shop at Circuit City. As a person who worked for both companies, I can honestly say that I will never spend a dime in Best Buy again. When I am specifically told to lie to customers in order to sell services or get out of honoring the protection plan, that just pushed me over the edge.

  32. narayan1121 says:

    @frodo_35: Best Buy only does that on major shopping days, like Black Friday or Tax-Free Weekends. They do it to prevent fights over products that are heavily discounted and in limited supply. So, chances are if that’s what you experienced, and if that’s the only time you’ve been to a Best Buy, you’re a shut-in that has no idea what’s going on in the outside world.

    • cecilsaxon says:

      @narayan1121:

      Don’t be nasty I did the same thing when faced with the “escorted” model of shopping that was being forced upon me when looking to buy 2 computers for my kids on a tax free weekend. I asked if they really wanted to walk a customer because I did not want to wait in line to be escorted through their computer department and they shrugged. I left and bought them from Dell.