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Circuit City Bankrupt, Requests Auction Sale on Products

In 2008, reports stated that Circuit City is losing billions of dollars in revenue. This triggered Circuit City to close down. Recession in the US really took its toll even on big companies.

In addition,

Circuit City said in a statement it may be forced to liquidate if it can’t find a buyer by the end of next week. The retailer asked a judge to approve a Jan. 13 auction, according to court papers filed Jan. 5 and unsealed today in U.S. Bankruptcy Court in Richmond, Virginia, where it is based.

“The company is engaged in significant discussions, meetings and negotiations with two highly motivated and interested parties concerning the terms of a going concern transaction,” according to the statement today, which didn’t identify the potential buyers.

Circuit City sought Chapter 11 protection on Nov. 10 after suppliers concerned about declining sales at almost 1,500 U.S. and Canadian stores cut off credit and demanded cash up-front for shipments. The retailer, which made less money than it expected from selling stores in bankruptcy, is asking for an expedited process to organize the auction, according to court documents.

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Circuit City Files Bankruptcy For Losing Billions

Circuit City, the second biggest chain of electornics store in the United States has recently filed bankruptcy for losing billions of dollars. Circuit City is among the top companies that has filed bankruptcy since the start of the world crisis this year.

BusinesWeek stated in a report that “Circuit City (CC) has lost more than $5 billion in stock market value over the past two years, and a bankruptcy filing has been anticipated for months (BusinessWeek.com, 7/2/08). Its business was gradually stolen away by discounters such as Wal-Mart (WMT), specialty chain Best Buy (BBY), and online sites like Amazon.com (AMZN) and Buy.com. In July, a proposed $1 billion acquisition by Blockbuster (BBI) fell apart. CEO Philip Schoonover quit in September under pressure from activist shareholder Mark Wattles.

Wal-Mart has vastly stepped up its commitment to consumer electronics over the past five years. Last year, Wal-Mart generated $17 billion in consumer electronics sales, while Best Buy did $28 billion and Circuit City did just under $11 billion, according to Pali Capital. Wal-Mart’s market share has surged thanks to its low-price mantra—just this past weekend, the retailer unveiled discounts on hundreds of items, including Blu-ray DVD players marked down to under $200.”

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