Circuit City is preparing for the possibility that it may be forced to shut at least 150 of its 712 stores and cut thousands of jobs in order to avoid filing for Chapter 11 bankruptcy in the run up to Christmas.
The report, which was in yesterday’s Wall Street Journal, cited anonymous sources stated that the retailer appears to have accepted that it will now go bankrupt and is frantically looking to delay the inevitable, at least until after the critical Christmas period.
Amongst the moves the retailer has reportedly undertaken is the retaining of bankruptcy counsel, recruiting of a turnaround consultant and is working with investment bank Rothschild to help secure debtor-in-possession financing; something that will allow the company to pay off day-to-day expenses while in Chapter 11.
According to WSJ, the trouble with the credit markets has exacerbated Circuit City’s problems in securing financing and is the reason why the retail chain is looking at liquidating $350m (£205m) in inventory that would be freed up by store closures.
Circuit City was unavailable for comment at the time of writing.