RICHMOND, Va. (CN) – Circuit City Stores filed for Chapter 11 bankruptcy on Monday, listing $3.4 billion in assets and $2.3 billion in debts. The move came a week after the electronic chain announced it would close 20 percent of its stores and lay off 17 percent of its workers.
The shuttering of 155 Circuit City stores is not expected to have a major impact on consumers, who have other electronics retailers to go to, industry analysts said.
The mass store closings may have a greater effect on mall landlords, whose stock prices already have suffered, and whose vacant buildings will affect the look and feel of the malls.
Developers Diversified Realty Corp., whose 720 shopping centers host 50 Circuit City stores, saw its stock fall nearly 25 percent on the news of the Circuit City bankruptcy, Reuters reported. Developers Diversified gets about 1.7 percent of its income from Circuit City.
That stock slide illustrates the bizarre nature of today’s economic crisis: company shares sliding by 25% because less than 2% of its income is threatened.
Richmond-based Circuit City is or was the nation’s second-largest electronics retailer, after Best Buy. Its top creditors include Hewlett-Packard, $118.8 million; Samsung, $115.9 million; and Sony, $60 million. Circuit City’s 4,463 shareholders own 168.2 million shares, according to the bankruptcy petition.
Circuit City arranged $1.1 billion in financing to allow it to keep operating through Christmas season, but it must use its holiday revenue to reduce that to $900 million by the end of the year. “It remains to be seen if they will get through the next year,” retired bankruptcy judge Frank Conrad told Reuters.