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Circuit City Still For Sale, in New Talks

RICHMOND, VA-The company says it is talking to two companies for a plan to stay in business. An auction could begin starting tomorrow, with liquidation by Thursday.

By Debra Hazel | Updated on January 12, 2009

RICHMOND, VA-Circuit City’s latest sale is itself. The question is, can it complete the sale in time to avoid liquidation? On Friday, Jan. 5, the troubled electronics chain, operating under Chapter 11 protection since Nov. 10, 2008, received approval from the U.S. bankruptcy Court to continue negotiations to put the company up for sale as a going business, separate business or individual assets. It also revealed it is in discussions with two unnamed parties regarding a deal that would allow it to remain in business.

“These interested parties are considering providing additional financing to allow the company to sustain operations and move forward with a subsequent restructuring through a stand-alone plan and/or purchasing the company or all or substantially all of the company’s assets,” said a statement from Circuit City. “The parties have substantially completed due diligence and now are in negotiations with the company and the company’s major stakeholders in order to finalize such a transaction. While the company is optimistic that a transaction can be successfully finalized, no assurance can be given that this will occur.” However, an auction of the company can begin on Jan. 13, and if a sale agreement is not completed by Jan. 16, a liquidation process can begin.

The credit crunch, however, is limiting options for what should be a viable chain, says Lon Rubackin, managing partner of GFI Retail Services Group and a former executive at defunct electronics chain Nobody Beats the Wiz. “The industry absolutely needs a second chain [to rival Best Buy],” Rubackin said. “Consumers need this.”

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