Circuit City, Canadian subsidiary file for creditor protection
InterTAN Canada Ltd., the owner of 772 The Source by Circuit City stores, said Monday it is filing for creditor protection after its U.S. parent filed for Chapter 11.
The second-biggest electronics retailer in the United States, Circuit City Stores Inc. sought creditor protection in United States Bankruptcy Court for the Eastern District of Virginia in Richmond.
Barrie, Ont.-based InterTAN said credit facilities were terminated as a result of Circuit City's bankruptcy filing. The Canadian company said it expected its case will be heard in Ontario Superior Court on Monday.
InterTAN said its stores will remain open and will honour returns, exchange warranties and gift cards.
"We regret the necessity of this action and will be working diligently with our suppliers, employees and creditors to produce a successful holiday selling season," said Ron Cuthbertson, president of InterTAN.
Circuit City was pushed to Chapter 11 as customers become tighter with their money in the face of the U.S. economic downturn. The company has negotiated a $1.1-billion US credit facility so it can pay its vendors and other partners for goods and services provided after the bankruptcy filing.
Circuit City also plans to cut 700 jobs from its regional and district support system. That news comes just one week after the company announced plans to close 20 per cent of its stores and lay off about 20 per cent of its 43,000-person workforce. The store closures would leave Circuit City with 566 U.S. outlets.
Circuit City bought InterTAN in 2004 for $371 million. In February 2007, Circuit City Stores Inc. announced the closure of 62 underperforming company-owned The Source stores across Canada.
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