November 10, 2008 2:45 PM
Skadden Leads Half-Dozen Firms in Circuit City Chapter 11
Posted by Zach Lowe
The Am Law Daily reported last month that Circuit City, among the nation's largest retailers with more than 700 stores in the U.S., had hired Skadden, Arps, Slate, Meagher & Flom in hopes of finding some way to avoid a bankruptcy filing.
While Skadden did help Circuit City secure a $1.3 billion line of credit recently, it wasn't enough to save the company from Chapter 11 following six consecutive quarters of falling sales and a loss of more than $5 billion in stock market value over the last two years, Bloomberg reports.
In its filing, Circuit City asks the court to hold on to $1.1 billion in bankruptcy financing arranged by Bank of America, The New York Times says. If the request is approved, the company would likely be able to remain open through the holiday season.
The company has about $3.4 billion in assets and $2.3 billion in debts. Most of that is owed to suppliers like Sony, Samsung, and Hewlett-Packard, the store's largest creditor (Circuit City owes the tech giant more than $118 million).
It's going to be a complex transition, and the company has hired several law firms alongside Skadden to navigate it. McGuire Woods will serve as local restructuring counsel in Virginia (Circuit City is based in Richmond); Kirkland & Ellis will be the company's special financing counsel, and Wilmer Cutler Pickering Hale and Dorr has signed on as special securities counsel.
Osler, Hoskin & Harcourt will advise the company on any restructuring matters in Canada, where Circuit City operates 770 stores, Bloomberg says.
Gregg Galardi, the Skadden partner who signed the court papers, did not immediately return a message seeking comment. As we've reported, Weil, Gotshal & Manges has gotten most of the plum bankruptcy assignments (such as Lehman Brothers) during the recent economic collapse, but Skadden's restructuring group has an impressive history of its own. In recent years, the firm has helped Xerox dodge bankruptcy and has advised Kmart during its own Chapter 11 proceedings in 2002 and 2003.Make a comment