Circuit City files for bankruptcy

Circuit City Stores Inc. will try to turn itself around under the protection of the federal courts.

A week after announcing that it was closing 155 stores and laying off thousands of employees, the Henrico County-based electronics retailer filed a Chapter 11 bankruptcy petition Sunday, ending weeks of speculation.

In one of its first moves, the company received approval this week from a federal bankruptcy court judge to borrow $1.1 billion from a group of 17 banks led by Bank of America to finance its restructuring.

The loan will help the company continue operations as it enters the all-important holiday retail season.

The question now is whether Circuit City can survive bankruptcy.

The company recently announced that it plans to close 155 of its stores, or about 21 percent of its U.S. locations, by Dec. 31, a move that will cut 17 percent of its domestic work force. That could be more than 7,000 people, according to estimates.

Circuit City also laid off about 700 people from its corporate offices in western Henrico.

— The Richmond Times-Dispatch