Circuit City latest retailer to file for bankruptcy

Ending months of speculation and rumors that it was heading for bankruptcy, the electronics and appliance retailer Circuit City became the latest casualty of the economic slowdown, filing for Chapter 11 reorganization on Monday. The move comes a week after the retailer announced that it was closing 155 of its 721 U.S. stores and outlets. 

In documents filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, the chain requested permission to continue honoring its gift cards, warranties, rewards points, and claims for refunds, exchanges, and other customer satisfaction programs. In contrast, in its initial filing, now-defunct Sharper Image  told the court that it specifically did not want authority to honor outstanding gift cards and merchandise certificates, which had an estimated value of around $40 million. But there’s still plenty of reasons to be concerned if you have a Circuit City gift card or other store obligation.

First off, there’s no guarantee that Circuit City will be able to restructure its business and avoid liquidation. Indeed, within five months of filing for bankruptcy reorganization in May, Linens ’n Things announced that it was liquidating its remaining stores. That chain also obtained court approval to continue honoring its gift cards and merchandise certificates, which are being accepted at its going-out-of-business sales in stores, but not online.

Here’s what to do:

• Whether you have a Circuit City gift card, return, warranty claim, or any other pending business, take care of it now. In fact, with an increasing number of retailers in financial trouble, it’s best to use gift cards, store credits, or anything else immediately.
• Avoid buying Circuit City gifts cards, which continue to be available from the chain itself and from third-party sources, such as Web-based auctions sites like eBay. Think twice before buying other gift cards, whether from retailers or financial institutions.
• If your local Circuit City closes, use any outstanding gift cards or certificates on the chain’s Web site.
• Avoid buying extended warranties or service plans from Circuit City, or any other retailer for that matter. We’ve never been fans of them anyway, given their cost and low-repair rates on most appliances and electronics.
• If you’re thinking about shopping at Circuit City, take into account the store’s precarious financial situation and the potential effects it might have on warranty obligations, returns, and other aspects of the company’s business. —Anthony Giorgianni

Comments

[Roy in Virginia]

I would like to suggest that this firm wasn't undone by the current financial climate. The seeds for this bankruptcy I think were set in 2007. Here is the AP release from 2007:
"RICHMOND, Va. - A new plan for layoffs at Circuit City is openly targeting better-paid workers, risking a public backlash by implying that its wages are as subject to discounts as its flat-screen TVs.
The electronics retailer, facing larger competitors and falling sales, said Wednesday that it would lay off about 3,400 store workers — immediately — and replace them with lower-paid new hires as soon as possible.
The laid-off workers, about 8 percent of the company’s total work force, would get a severance package and a chance to reapply for their former jobs, at lower pay, after a 10-week delay, the company said."

When they did that I stopped shopping at our local Circuit City and I know others who did the same. No employee loyalty earns no customer loyalty!

[Matthew]

My advice to those Circuit City peeps that lost their jobs, hit the jobs boards fast while there are still jobs posted -

www.linkedin.com (professional networking)
www.indeed.com (aggregated listings)
www.realmatch.com (matches jobs based on your skills)

Good look to those looking for work!

[Joel]

I agree with Roy in that the state of the market was only the final straw for CC, they had problems well before this happened. I only wish I would have known this before getting a CC Rewards Visa in October and putting almost $2K on it. I will now spend my rewards and try and pay it off and cancel the card as I am not confident they will be around by this time next year.

[phoenix arizona insurance]

Circuit City in our area has completely gone away, leaving Best Buy as the only major electronics retailer. Certainly place like Walmart sell electronics too. But Best Buy now has a big piece of our market and probably not good for competition & prices.