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Circuit City going belly up

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jwinslow;1383322; said:
Interesting. When was that? Right away? 2nd/3rd/etc week of the liquidations?

From what I've seen, if you're in the area it might be worth stopping by, but I wouldn't make a long trip for it.
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Not sure ... it was sometime within the first month, mid-late November IIRC.

I believe the 1st week deals weren't anything spectacular, but they started getting really aggressive in the 2nd & 3rd weeks. Take that with a grain of salt though, those store closings were ahead of Black Friday.
 
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Buyer Beware ...

Circuit City, R.I.P. : Ben Patterson : Yahoo! Tech

<snip>

Of course, news of the Circuit City liquidation sale will draw plenty of bargain hunters, but (as I've blogged before), buyer beware.

Typically, closeout sales are final: no refunds or exchanges, so think twice before snapping up a big-ticket item like an HDTV. Also, keep in mind that closeout prices often aren't as rock-bottom low as you'd think; make sure to comparison shop online, and don't be fooled by big "75% OFF!" signs on items that have been marked up.

<snip>
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Sound advice.
 
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If you're the second largest retailer in your industry, and you've been afforded bankruptcy protection by the courts, it takes some seriously bad management to be unable to reorganize and survive it. It's one thing if you're unable to generate any revenue, but that's not the case here.

They reported almost $1.1 billion more in assets than liabilities as recently as August 31st, and were able to break over 150 leases in malls where they no longer operate stores. And yet, less than 6 months later, they've completely failed and all of their 30,000 employees will be out of work. :shake:
 
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Tresselbeliever;1384069; said:
Just speculating here, but I'm guessing Circuit City didn't tap into its contingent credit lines in time and those credit lines ended up getting shut off. That's what happens in a credit crunch I guess.
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Don't know if that is true or not - but the following history of events from CC CEO is surely illuminating - seems they did have access to DIP notes, but (implied within the text) were the terms re-written in a manner leading to the 1/16 outcome?
01/09/2009

Message from Jim Marcum


Team,

This week, the company filed with the Bankruptcy Court a motion that seeks Court approval for a process that formally puts the company up for sale. A sale could include as a "going concern" (meaning that the acquirer would continue to operate Circuit City as a business), pieces of the company as separate business units (such as markets, regions, or operating units) or as individual assets (such as the sale of inventory). The motion was made public today in advance of a hearing to approve the motion later today.

As we told the Court in our motion, we are engaged in active and significant discussions with more than one interested party regarding a sale of the company. The discussions with each of these parties have focused on a "going concern" transaction. In particular, interested parties are contemplating providing Circuit City with financing to complete a reorganization through a stand-alone plan and/or purchasing all or substantially all of our assets. At this point, the parties have substantially completed due diligence and are in negotiations with us and our major stakeholders in order to finalize such a transaction.

Let me back up and explain in greater detail what this filing means, what led us to this point and what it means going forward.

One of the original requirements of our debtor-in-possession (DIP) credit facility was to have a sale or auction process occur no later than early March if no other resolution had been reached for the company at that time.
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(Originally sale or auction as a going concern, by March was the goal - then by 1/9/09 all bets for March are off. Auction is the way to go, if it can be concluded by 1/16 - whew!)
Thus:
As we have worked, the world has continued to change. Poor macroeconomic conditions are further impacting our business and our vendors' confidence. Some of our vendors, including some key merchandise vendors, are still unwilling to relax their strict terms and have not provided meaningful credit. Securing better vendor credit and terms is essential for Circuit City's survival.

Faced with these conditions, after consulting with our advisors, the Creditors' Committee and our Lenders, in December we agreed with our DIP lenders to move the auction process for the company's assets forward to this week.

Based on the negotiations with the interested parties that I mentioned above as well as discussions with our vendors and lenders, we are optimistic that we can successfully complete a transaction. Of course, nothing is certain and we can't provide any assurance or guarantee that a transaction will be completed.

A number of outcomes are possible. We could reach a sale agreement and have it approved by the Court before the auction starts on the 13th. These discussions or the auction could result in an approved sale agreement before the hearing on the 16th. Or, we could reach an agreement with the DIP lenders to amend our agreement and change or delay the timing of the hearing on the 16th. To the extent that these efforts are unsuccessful, we will need to pursue a more dire path for the company.

There's no way to sugar-coat this, so out of respect for you I'm going to be completely honest: if no sale agreement is approved, then the company will be forced to liquidate beginning soon after the hearing on the 16th.
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Jake;1384064; said:
If you're the second largest retailer in your industry, and you've been afforded bankruptcy protection by the courts, it takes some seriously bad management to be unable to reorganize and survive it. It's one thing if you're unable to generate any revenue, but that's not the case here.
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That's what happens when you fire your best employees to save on wages...
 
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jwinslow;1384087; said:
That's what happens when you fire your best employees to save on wages...
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Well, that's definitely one way.

I don't think Circuit City was unionized, however, and that's usually when senior employees are kept instead of the best ones. At least, that's what happened when we had to layoff some staff in 2002. We were directed to cut costs, but we lost some good people because they didn't have as much seniority as some of the others.
 
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Jake;1384064; said:
If you're the second largest retailer in your industry, and you've been afforded bankruptcy protection by the courts, it takes some seriously bad management to be unable to reorganize and survive it. It's one thing if you're unable to generate any revenue, but that's not the case here.

They reported almost $1.1 billion more in assets than liabilities as recently as August 31st, and were able to break over 150 leases in malls where they no longer operate stores. And yet, less than 6 months later, they've completely failed and all of their 30,000 employees will be out of work. :shake:
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That's because the margins on electronics are so thin, and CC's management so bad, they were operating for at least the past five or six years on their lines of credit. They'd take delivery of products, pay on credit, then repay the creditors once the product was sold. When the shit hit the fan with the credit crisis in October, suppliers stopped shipping to CC. Sony, for instance, inadvertently broke the news a week early when they announced during an earnings call that they had rerouted stock that was in-transit to CC stores, and were shutting them off completely, because they knew if CC took delivery, Sony would never be paid.

As of October, CC was essentially stuck holding a shit-ton of seasons-old merchandise with no means to purchase the hot in-season items six weeks before Black Friday. It's tough to sell your wares at retail when it's all discontinued stock that's available across the street at Best Buy at clearance prices.
 
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I stopped by a CC today that had just opened up a few months ago and the prices were higher than Best Buy on just about everything. I asked the manager if the prices were negotiable and he said that they were before this week. Crazy how things like this work
 
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Basebuck;1385014; said:
I stopped by a CC today that had just opened up a few months ago and the prices were higher than Best Buy on just about everything. I asked the manager if the prices were negotiable and he said that they were before this week. Crazy how things like this work
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I was wondering about that...I broke my mp3 player and was wanting to buy an iPod. I was hoping to get a good deal at CC but I guess it's not even worth the try huh.
 
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Basebuck;1385014; said:
I stopped by a CC today that had just opened up a few months ago and the prices were higher than Best Buy on just about everything. I asked the manager if the prices were negotiable and he said that they were before this week. Crazy how things like this work
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The problem is they have to turn everything over to a liquidation firm. The firm sets the prices, and there is no negotiating or price matching. From what I hear, they typically first return everything to MSRP. Then over time they slowly lower everything at set increments. So no real deals right now.
 
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I got a real cheapo camcorder on Saturday night at 9:00pm. There were only 2 left in their system, but they couldn't find them. They told us they're assuming theft. So they were going to give us the floor model. They went to look for the "stuff" that comes with it but came back at first saying they couldn't find it. Eventually they found something that they thought was right. Well....we got home and it was all wrong, so we went back as they were closing. They let us right in and started helping us. At first I thought he was just going to give us a more expensive model. Finally they said pretty much the same thing from scott91575's post and gave us a refund, despite all the ALL SALES ARE FINAL signs.

It was a surprisingly good experience considering that a) they're not supposed to take returns and b) they're all losing their jobs anyways. I would probably be pissed at every customer if that were me.

One funny thing about the missing camcorders was that they didn't care about the thefts (why would they?). When the manager opened the shelving unit to turn off the alarm that sounds if you remove a floor model from that tether thing....he noticed the whole unit was turned off. They were pretty much showing us exactly how to steal from them. I thought that was pretty funny.
 
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