14 November 2008 | Paul Snell
Circuit City, the US electronics retailer that asked suppliers for help improving its cash flow, has filed for bankruptcy protection.
The company said it had filed for Chapter 11 protection, allowing it to continue trading while it restructures, closing 155 stores and cutting 700 jobs.
Following poor second-quarter results, last month Circuit City said it was asking its suppliers to help it improve its cash flow and liquidity. Chief financial officer Bruce Besanko said the firm was in weekly discussions with vendors (Web news, 2 October).
But earlier this month the company confirmed some suppliers had taken tougher action regarding payment terms, in some cases requiring sesttlement before goods would be shipped.
And attempts to improve the situation appear to have been in vain, according to a company statement made this week: "Despite aggressive efforts to secure vendor support, concerns about the company's liquidity and ability to pay for its purchases in the difficult economic climate have escalated considerably further, impairing our ability to conduct business."
The retailer said bankruptcy protection would give suppliers confidence they would be paid for stock provided, and the firm would have products to sell over Christmas.