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The electronics retailer was unable to find a buyer or come up with any other exit plan. On Friday executives announced it would liquidate, close its 567 U.S. stores and leave 30,000 without jobs.
Stores to close include those in Dickson City and Wilkes-Barre Twp. A 1.2 million-square-foot distribution center in Covington Twp. that promised to employ 325 has been on ice for a year and now will never open.
"This is the only possible path for our company," Circuit City's acting Chief Executive James A. Marcum said in a statement. "We are extremely disappointed by this outcome."
The company had been seeking a buyer or a deal to refinance its debt, but the hobbled credit market and consumer worries proved insurmountable. Negotiations for an acquisition went past midnight on Thursday, Circuit City lawyer Gregg Galardi said in court. Two buyers -- Mexican billionaire Ricardo Salinas Pliego, who controls a chain of electronics stores in Latin America, and the Golden Gate Capital private equity firm -- had been looking to buy the company in a shrunken form, with either 350 stores or as few as 180 stores. But the company couldn't secure the necessary financing or support from vendors.
Shareholders are likely to receive nothing, as is typical in bankruptcy cases. Circuit City said in court papers it has appointed Great American Group LLC, Hudson Capital Partners LLC, SB Capital Group LLC and Tiger Capital Group LLC as liquidators. They will pay a 70.5 percent return on merchandise.
It was unclear what would happen to the company's 765 retail stores and dealer outlets in Canada as there are still bids for the Canadian business.
At Circuit City in Dickson City, a handful of customers perused the thinning shelves of merchandise as employees huddled, discussing the store's rise and fall and the fate of other retailers.
Charles Rose of Moosic was alone among the big screen televisions with expectations of buying one before the Super Bowl. He knew the store was in trouble, but wasn't aware that the company would liquidate and go away. Nevertheless, he said he wouldn't mind buying something from the store, since the warranty is from the manufacturer, not the retailer.
He shops at both Circuit City and its arch rival Best Buy, finding them comparable in price. But he gives the edge to Best Buy on customer service.
The greatest disappointment may be in Covington Twp., home to a 1.3 million-square-foot distribution center built for Circuit City. As recently as the fall, a letter from the company said Circuit City "looks forward to many years of successful operations in Covington Township."
"It's a shame the company took a turn for the worse and that potential jobs were lost," said Covington Board of Supervisors Chairman Tom Yerke. "We are confident it (the building) will be marketed and a new occupant found."
The building is owned by First Industrial Realty Trust.
A manager at the Circuit City in Dickson City referred questions to corporate offices, but said the store will remain open for the near future through the liquidation process.
Circuit City had been a retail success story. The balance of power between Circuit City and Best Buy began to shift three years ago when Circuit City executives announced they were eliminating its experienced, commissioned sales staff, said Britt Beamer, a retail analyst with America's Research Group.
"That move told customers not to come back," he said. "It may be dumbest move I've seen in retailing."
Circuit City couldn't best Best Buy, which Mr. Beamer said was more innovative, better operated and held onto appliances. Shares of Best Buy Co. rose $2.44, or nearly 9 percent, to $29.58 in afternoon trading.
"A happy appliance customer is a loyal customer," Mr. Beamer said.
Circuit City is the latest casualty of an unprecedented pullback in consumer spending that has driven other brands such as KB Toys, Mervyns LLC and Linens 'N Things into bankruptcy. Experts believe there will be more to come.
The Associated Press contributed to this report.
Contact the writer: dfalchek@timesshamrock.com
To see more of The Times-Tribune or to subscribe to the newspaper, go to http://www.thetimes-tribune.com. Copyright (c) 2009, The Times-Tribune, Scranton, Pa. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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