billddrummer

Top Online Customer Experience: Booksellers Take the Lead

What's unfortunate is that the only way to access the list is to pay $749 for the report.

I'm not going to do that.

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys!!

Well, the liquidation sales in the US are proceeding rapidly, and it's only a matter of a few weeks until CC ceases to exist in the states.

Bell Canada has struck a deal to acquire the 570 InterTAN outlets:

www.bloomberg.com/apps...%
3AUS&sid=azBO7KZWT...

Leases are for sale at all the US locations (who wants them now, with retail the way it is?), the website and name are on the market, and DJM Realty is disposing of the minimal amount of real estate left on the company's books--5 stores, the portion of the HQ facility it owns, and some undeveloped land parcels.

Perhaps someone can get traction out of licensing the logo, like Sharper Image did after it liquidated. I doubt it.

The end. El colmo. Le comble.

Circuit City's Book Value: What's Real, What's Not?

A followup comment:

If the statistic current assets - all liabilities is computed based on the 11/30/08 financial statements, a value of <$29,430> million results. Leaving the company technically insolvent, under that definition.

Circuit City's Book Value: What's Real, What's Not?

As a CC watcher for several years, there are a number of items in that $2 billion in FF&E that are suspect.

The company owns 5 of its retail stores in the US, a portion of its HQ complex in Richmond, and a distribution center in Canada. The remainder of the FF & E is store fixtures, delivery vehicles, and the like--none of which carry much value under a liquidation.

Bids have been received for the retail stores, and the company is currently seeking a buyer for the Canadian operation to acquire it as a going concern. There is a fair amount of legal wrangling between the Canadian bankruptcy court and the US court regarding the priority of the US creditors (including the underwriters of the DIP facility) with regard to their rights to proceeds from asset sales in Canada.

The $1 billion book value referenced above may refer to the value assigned at the inception of the Chapter 11 filing, which was based on the 8/30/08 financial statements. A report filed with the bankruptcy court on 1/15/09 revealed an equity position of $695 million on $3.5 billion in total assets. The financial statement covered the period 11/10/08-11/30/08 (from date of filing to the end of that month). The company reported a $400 million loss during the period, with a $315 million asset impairment charge related to the 155 stores slated for liquidation the week prior to the filing.

Bids for the company that proposed survival as a smaller chain had a stipulation that vendors extend credit post-petition. No vendors were willing to open new credit lines, even with new management.

In my opinion, even if the Canadian operation is sold as a going concern, there will be insufficient funds remaining to pay common shareholders anything on their ownership. Which is as it should be.

CC wasn't able to survive the recession. Rather than look to the government for bailout funds, liquidation was the proper course of action.

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys,

To CanadaD,

Thanks for the link. It looks like the US bankruptcy court and DIP lenders did an end-around on the Canadian order to step ahead of the unsecured creditors named in the Canadian filing on the proceeds from any asset sales in Canada.

One thing I'm not sure of, though, is how priority was originally established when the initial filings took place. If the DIP lenders held that Canadian proceeds were to be applied in the same manner as the pre-petition agreement, then advances on the DIP facility to Canada would have to be repaid before proceeds were available in Canada. The vaunted '6th Charge' seems to be a way to equalize the pain between Canada and the US operation.

Since CC in the US is liquidating, and it's probably not going to return much in the way of cash to the estate after expenses, there may be a huge deficiency that will show up in the InterTAN books for its share of the DIP financing--even though it's marketing itself as a going concern. Also at work is the potential that the deficiency could be claimed by US creditors left out in the cold (another pun) as the liquidation winds up. They may push for rights to the Canadian assets based on the way the Amended Order was written.

It looks to me like the responsibility for that potential amount is what's at stake, not to mention the position of the unsecured creditors waiting for some clarification on where they stand.

Interesting stuff. The game is certainly afoot!

Bill

Circuit City Falls Further: 'Bring Out Your Dead'

to phil,

Well, perhaps the Canadian piece will survive. And did you notice that Bruce Besanko joined OfficeMax as CFO?

www.bloomberg.com/apps...

He's no dummy, and probably had his resume already circulating even before the Chapter 11 filing.

Now, who's going to hire Bill Cimino?

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys!

Further on the post mortem:

In the filings on the BK website, is a financial statement CC filed covering the 11/10/08-11/30/08 period. Part of the filing required that they post monthly financial statements.

During the 21 days immediately post-filing, the company lost $400 million.

Here's the link:

www.kccllc.net/circuit...

Clearly, there was no hope that the ship could have been saved, if it was taking on water at that rate.

The Economics of Liquidation

to Smarty_pants,

Shipments due for stores will be delivered on the same schedule as before. But there won't be any new product allocated by vendors. As you rightly point out, what's in the distribution centers will be parceled out to the stores, but nothing new will be coming into the centers.

In addition, Bose branded products are specifically excluded from the liquidation inventory. I don't know whether that means the inventory will be returned to the vendor or not marked down.

I'm guessing it will be returned. And Bose will have an inventory glut that they will need to work off with its other customers.

Circuit City's Liquidation: Schoonover Could Have Saved It but Didn't

The business model may have worked if the company had paid out the leases it was liable for on closed and relocated stores, rather than continuing to make payments to the landlords.

That strategy cost approximately $89 million a year, and when top line margins are getting squeezed with competition, $89 million is not a paltry sum.

By the time the company had those leases set aside, they were already in bankruptcy, and suffering from a dramatic sales decline (the company's attorney said sales had dropped 43-50% since the Nov filing, as people fled the stores even faster than before).

It is a shame, and several hundred million dollers worth of shareholder value has been vaporized over the past 18 months.

Let's hope someone at Harvard Business School can dissect the demise of this once-great company and allow others to learn from it.

Circuit City: Closing Time

To phil,

I wholeheartedly agree with you that the lack of execution of the basics of retail--have well-priced products in stock in attractive stores staffed by people who understand what they're selling--was the reason for CC's demise.

Bailout money isn't available to everyone. And clearly, CC wasn't too big to fail. Because it just did.

Bill

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys,

I saw the same thing:

www.bloomberg.com/apps...

It will be interesting to see if InterTAN can do the management buyout and stay open. It won't take much to tip it over.

Bill

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys!

The auction begins today:

www.twice.com/article/...

The only question is whether it's a liquidation or a going concern.

We'll find out.

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys!

CanadaD, thanks for the report from the CES convention. Attendance was down 20% from last year, and from what I read, no really compelling 'gottahave' products came out of the event.

This may be the last day I can post for awhile, because the company is tightening up internet access for all employees.

Keep this thread running as long as you can, if I'm not around.

Bill

Circuit City Falls Further: 'Bring Out Your Dead'

phil,

You're right about how the stuff that's released is only the tip of the iceberg of lies, and is more an exercise in spin mechanics than the truth.

I'm thinking they held off because of the negotiations, because it won't matter if they get a buyer. In addition, there's a 2% fee in it for the successful bidder, even if it doesn't close.

We'll see what happens.

Circuit City Falls Further: 'Bring Out Your Dead'

Hi guys!

Sorry about the multiple posts--unresponsive server this AM.

Anyway, the offers being solicited by CC are due on Tuesday the 13th, according to court documents unsealed today.

I think one of the bidders will be Wal-mart. Pliego may be the other one.

Lots of pizza and Chinese takeout this weekend!