Circuit City files for bankruptcy

The struggling electronics chain says that it's seeking Chapter 11 protection and that it will raise its projected job cuts to about 20 percent of its staff.

Circuit City Stores / Richard Cadan Photography

Struggling electronics chain Circuit City announced Monday that it has filed for chapter 11 bankruptcy.

Chapter 11 allows a company to hold off creditors while it attempts to restructure its finances. Circuit City said Monday that it has negotiated a commitment for a $1.1 billion debtor-in-possession revolving credit facility to supplement its working capital.

Circuit City announced earlier this month that it would shutter 155 stores and lay off 17 percent of its workforce. The retailer said Monday that it will eliminate an additional 700 positions in addition to the reductions resulting from the store closings, bringing the total layoff projection to around 20 percent of its employees. According to the company's FAQ, in February it had approximately 45,900 employees, not including workers taken on during peak selling periods.

"We appreciate the support we have received from our lenders in the midst of such a tight credit market," acting CEO and vice chairman James A. Marcum said. "With this support, we believe we have the opportunity to leverage our market position and the strength of our brand to restore Circuit City to solid financial footing."

See also: "For Circuit City, holidays not looking happy."

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