Circuit City is Dead

January 16th, 2009 at 12:00 am
 


circuit city downfall

The United States’ second largest electronics retailer is going bust.  After last year’s announcements from Circuit City that they will be closing 155 low performing stores then their filing for bankruptcy, the retail giant has failed to find itself investors or a buyer to keep them afloat.  Consequently, the whole company is going bust.

"We are extremely disappointed by this outcome. The company had been in continuous negotiations regarding a going concern transaction. 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 to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company," James Marcum, acting president and chief executive officer for Circuit City, said in a statement.

Negotiations went on well beyond midnight last Thursday but ultimately no deal was reached.  Two buyers — Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America, and the Golden Gate Capital private equity firm — had been looking to buy the company in a shrunken form, with either 350 stores or as few as 180 stores. But the company couldn’t secure the necessary financing or support from vendors. [AP]

Employees were notified Friday that they would be losing their jobs once the judge orders the liquidation and that the closing process would begin on Friday.

Naturally, everyone at Circuit City’s top brass expressed their sadness.  Alan L. Wurtzel, the son of company founder Samuel S. Wurtzel, and the chief executive from 1972 to 1986, board chairman from 1986 to 1994 and vice chairman until 2001 said, "I feel particularly badly for the people are employed or until recently were employed."