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October 20, 2008 4:34 PM

Hoping to Avoid Bankruptcy, Circuit City Taps Skadden for Restructuring

Posted by Brian Baxter

The Wall Street Journal reported on Monday that Circuit City is considering a plan to close 150 stores and cut thousands of jobs in an effort to avoid a bankruptcy filing.

The Richmond-based consumer electronics retailer has turned to a team of lawyers from Skadden, Arps, Slate, Meagher & Flom to serve as bankruptcy and restructuring counsel. The firm bolstered the practice group earlier this year by naming Chicago-based Timothy Pohl as one of its three corporate restructuring coheads. (Chicago-based John "Jack" Butler, Jr., and New York-based J. Gregory Milmoe are the other two practice leaders.)

Sales have plummeted for many retailers this year; some, like Boscov's and Mervyn's, have been forced into bankruptcy. If Circuit City is hoping to avoid that fate, Skadden is a good choice for outside counsel.

The firm advised Xerox on its reorganization plan several years ago, when the Norwalk, Connecticut-based document management company was pushed to the brink of bankruptcy. And when Kmart, the third-largest discount retailer in the U.S., filed for bankruptcy in January 2002, Skadden was there to guide the company out of Chapter 11 only 15 months later.

The Journal reports that any eventual bankruptcy filing by Circuit City would be the largest by a U.S. retailer since Kmart's filing.

Dallas-based Blockbuster, the world's largest video rental chain, withdrew a $1.3 billion offer to acquire Circuit City in July.

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CC will survive. They have a lot of big plans for the yrs ahead... The new "City" design actually works a lot better than Best Buy... The new and improved CC might just give Best Buy a run for the money

I don't know what ur talking about. Circuit city lost 239 million dollars from continuing operations last quarter alone and have over 1 billion dollars in merchandise payable with less than 80 million cash on hand, do the math??? That equals bankruptcy very soon even if they do close stores and fire people. Their suppliers are not happy and they will not survive...

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