Richmond (WA) – Circuit City today said it has filed for bankruptcy protection, mainly to ensure that it can enter the Christmas season with stocked store shelves. The company also announced further job cuts, which will affect about 20% of the company’s staff, including those who will be let go as part of previously announced store closings.   

Circuit City said that it filed for bankruptcy protection since “vendor concerns about the company's liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably,” despite the company’s announcement that it would “address the company's financial condition and deteriorating liquidity position.” These concerns apparently impacted product supplies to Circuit City in a negative way, ultimately leaving the Chapter 11 filing (also described as “reorganization relief “) as the only viable choice for stakeholders and probably most employees.

Circuit City officials said that the company has negotiated for $1.1 Billion in debtor-in-possession financing revolving credit to supplement its working capital. The company assured vendors that they will be paid for merchandise the company receives post-filing so the company's stores can be sufficiently stocked for the holiday selling season.

As part of the reorganization the company has laid off employees in addition to those that are affected by the closing of 155 stores around the country. According to a statement, 700 positions were cut on November 7 in the firm’s corporate, regional and district support segments. Including the positions that will be lost through the store closings, Circuit City expects that its workforce will contract by about 20%. Circuit City said that it will be operating 566 stores following the closings.