| By Maureen O'Gara |
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| November 10, 2008 05:54 PM EST |
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2,213 |
Last week Circuit City, the second-biggest electronics retailer in the US, decided to close down 25% of its stores, some 155 shops, by December 31 – in part because suppliers wanted to be paid upfront.
When its suppliers heard the news it spooked them into demanding even more money upfront – or else no deliveries for the holidays.
With consumer spending dying, the liquidity crisis at the bank and quarters worth of losses on the books, Circuit City didn’t have the money – or a sales staff that knows much of anything – so it sought refuge in Chapter 11 Monday.
It’s got a special $1.1 billion debtor-in-possession line of credit to keep the doors open while it tries to sort itself out. Such a thing is practically miraculous these days.
Its biggest creditors are HP ($119 million), Samsung ($116 million), Sony ($60 million), Zenith ($41 million) and Toshiba ($18 million) but it owes a lot more.
It’s laying off about 17% of its domestic work force, roughly 7,300 people.
An AP story said Chapter 11 could help get the company out of leases for some bad store locations, which has been a chronic problem for the company.
Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025.
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