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Circuit City Files for Bankruptcy (Update)

TSC Staff

Circuit City (CC Quote) filed for bankruptcy Monday, about a week after it said it would close 20% of its stores.

The electronics retailer says it has secured a commitment for $1.1 billion in debtor-in-possession financing. This revolving credit facility replaces the company's $1.3 billion asset-based credit facility and is being provided by the same lenders. This credit will allow Circuit City to pay vendors and other business partners for goods and services received after the filing.

Last week, the Richmond, Va., company said the move to close 155 stores was partly due to its deteriorating liquidity position and continued weakness in the economy.

The company said a number of factors have hurt its financial state in recent weeks, including declining consumer confidence and slower spending.

Among other things, the company hasn't been able to collect a roughly $80 million tax refund that the company believes it should be getting from the federal government.

Circuit City has steadily been losing market share to rival Best Buy (BBY Quote).