Circuit City Stores, Inc. has filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Richmond, Va.

The Nov. 10 announcement followed its decision a week earlier to close 155 stores nationwide. As of now, Circuit City's six Central New York locations are not on the list of stores to be closed.

Circuit City operates stores at the Carousel Center mall in Syracuse, the Fingerlakes Mall in Aurelius, and the Sangertown Mall in New Hartford, along with locations in Vestal, Victor, and Horseheads.

Circuit City says "waning consumer confidence and a significantly weakened retail environment" have affected the company's sales and gross profit margin more than management had anticipated.

In addition, following Circuit City's second-quarter earnings announcement, some of its vendors have taken restrictive actions on payment terms and the credit they make available, the company said.

Circuit City also says it hasn't been able to collect an income tax refund of about $80 million the company believes it is owed from the federal government.

Operating under the protection of Chapter 11 provides the company's vendors with assurances that Circuit City will make payments for merchandise the company receives post-filing so it can be sufficiently stocked for the holiday shopping season.

In conjunction with the filing, Circuit City has negotiated a commitment for a $1.1 billion debtor-in-possession (DIP) revolving line of credit to supplement its working capital. Its same lenders are providing the DIP line of credit, which replaces the company's $I.3 billion asset-based line of credit and provides the available funding for Circuit City to pay its vendors for goods and services received after the filing.

A Nov. 11 report on Bloomberg.com cites Circuit City's bankruptcy filing as indicating the company owes $119 million to Hewlett Packard Co. and $116 million to Samsung Electronics Co.

In the filing, Circuit City listed assets of $3.4 billion and debt of $2.32 billion, according to the Bloomberg report.

Circuit City will continue with normal operations as management focuses on a corporate restructuring plan, the company said.

As a further cost-saving measure, the company cut 700 jobs in its corporate headquarters on Nov. 7. Those reductions are in addition to the job losses resulting from the store closings, the company said.

Circuit City's cost-cutting moves have resulted in a combined domestic work force and store-base reduction of about 20 percent, according to the company.

"The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure, and ultimately position the company to compete more effectively," James Marcum, vice chairman and acting president and CEO of Circuit City, said in a news release.

On Nov. 3, the company released a list of stores it plans to close. The store closings include eight locations in the New York City and Long Island areas that will shut down by the end of the year.

Headquartered in Richmond, Va., the consumer-electronics retailer currently operates 712 superstores and nine outlet stores in 165 U.S. media markets. After the store closures, Circuit City will operate 566 stores in 153 U.S. media markets.

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