Circuit City is considering closing at least 150 of its 712 stores and cutting thousands of jobs to stave off a Chapter 11 bankruptcy filing before the holiday selling season, according to a report in today’s Wall Street Journal.The good news is that credit markets appear to be loosening a bit, which could make life much better for CC and the various other retailers who are currently suffering.
The newspaper, citing anonymous sources, said the retailer has retained bankruptcy counsel, a turnaround consultant, and is working with the Rothschild investment bank to help secure debtor-in-possession financing, which allows a company to pay for its day-to-day expenses while in Chapter 11.
Circuit City has had little success securing financing amid the tight credit market, and is looking at liquidating $350 million in inventory that would be freed up by the store closures, the report said.
Wall Street surged on a burst of optimism Monday, propelling the Dow Jones industrials up more than 400 points on more signs of a reviving credit market and comments from Federal Reserve Chairman Ben Bernanke. Investors who had sold furiously in recent weeks in response to immobile credit markets became more optimistic as bank-to-bank lending rates eased further. There's also less demand for the safest Treasury bills.