One more US giant has been forced to follow the path of Lehman Brothers. This company is Circuit City. It is an American dealer and retailer in brand-name consumer electronics, personal computers, and entertainment software. It is a Fortune 500 company which operates over 600 superstores in different parts of USA. On November 3, 2008 it was revealed that Circuit City would close 155 stores and lay off 17% of its workforce by the end of the year as a result of continually struggling to remain profitable. After 4 days, on November 7th this company laid off more than 500 corporate employees from their Richmond, Virginia headquarters. Now the company’s shares have collapsed to historical low of 25 cents.

But all these measures could not make it profitable. Finally today Circuit City has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy. Actually in USA, bankruptcy protection is a popular legal mechanism which allows a troubled company to keep its creditors at bay while it draws up a new business plan, which has to be approved by a bankruptcy judge. This method gives the bankrupt company some time to sort out their problems, cut costs and prevent it becoming completely decimal. Moreover, according to latest Washington’s Labor Department’s official report around 6.5 per cent of the US workforce is now jobless. The situation of American economy is very critical. Now how new president Obama will handle all these troubles will be a matter of concern for the whole world.

11:29 AM
Categories: General Info. Author: SacHu