is considering a plan to close at least 150 stores and cut thousands of jobs as an alternative to filing for bankruptcy-court protection, according to a published report.
Earlier this month, the electronics retailer hired Skadden, Arps, Slate, Meagher & Flom LLP -- the law firm that oversaw the Chapter 11 reorganization of Kmart -- as its bankruptcy counsel, the
Wall Street Journal
reports, citing several people familiar with the matter.
Circuit City also retained a consulting firm to develop a turnaround plan and an investment bank to guide talks with banks and secure emergency funding, the newspaper reports. The company also has been analyzing how much money it could raise by liquidating inventory.
The company's advisers are trying to line up debtor-in-possession financing. But because of tight credit conditions, lenders have shown little interest in providing such financing to Circuit City, the
Circuit City has 714 stores in the U.S. and another 772 stores and outlets in Canada.
Circuit City hopes to avoid a bankruptcy filing before the holiday season, people familiar with the matter said, fearing customers might doubt the ability of a retailer involved in bankruptcy proceedings to provide warranties on products, the
Circuit City spokesman Bill Cimino said the company wouldn't discuss details of its plans. He said many options were under consideration, according to the newspaper.
This article was written by a staff member of TheStreet.com.