Monday, November 10, 2008

Circuit City files Chapter 11

The news is all over the place about Circuit filing for bankruptcy protection.

Given their track record and the current economic climate, I don't think anyone is surprised. Vendors started threatening to withhold product for the holiday season if Circuit didn't make good on its debts to them. Even with the Chapter 11 and a $1.1 billion dollar loan, they are still in a very hard spot. They no longer have any real leverage to negotiate good deals on product. I think the only reason CE vendors haven't just pulled the rug out from under Circuit is that they don't want to see Wal-Mart do to consumer electronics what they did to the toy industry.



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