Circuit City Declares Bankruptcy; H-P Owed $119 Million

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Circuit City has now filed for bankruptcy, the latest chapter in a worsening story.

Just recently, the US-based consumer electronics giant announced the shutdown of 155 stores, a prelude to the recent action.  Now, the company is planning to reorganize itself while soliciting the support of its vendors, and optimistically emerge from protection in June.  US Bankruptcy Court filings also pointed to a strategy that includes the closure of additional stores, and considers a distressed sale of the slimmed-down operation.

The list of creditors is long, and the amounts owed colossal.  Hewlett-Packard is left holding the bag on $119 million, and Samsung is owed $116 million.  Whether those creditors decide to resume confidence in Circuit City remains unclear, though the trajectory is clearly downward.  In the case of a complete liquidation, major labels would also suffer the loss of more retail floorspace, part of an intensifying problem.