Published On: January 16, 2009

Circuit City Liquidates But Could Be Reborn After Auction

Published On: January 16, 2009

Circuit City Liquidates But Could Be Reborn After Auction

There is at least the possibility of a silver lining in the massive, dark clouds currently sending rolling thunder and incendiary lightning down onto poor Circuit City. The company has gone from filing Chapter 11 to door-closing Chapter 7 bankruptcy.

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Today is the day that damaged big-box retailer Circuit City finally gave up its will to live as the company transitioned from Chapter 11 reorganization to the much more serious Chapter 7 liquidation bankruptcy. The company will likely start the fire sale soon and consumers will camp out overnight at many locations to get first dibs on HDTVs, Blu-ray players, GPS devices and any other electronic goodie that isn't nailed down as the failed retailer tries to pay back its vendors pennies on the dollar for what they are owed.

Over 30,000 people in the United States will lose their job because of the failure of Circuit City. This only adds to the worrisome unemployment problem in the country just days before the inauguration of president Barack Obama who is trying to create over 3,000,000 new jobs for Americans in 2009. Circuit City just moved him one percent in the wrong direction in one day.

Once every electronic component in Circuit stores have been turned into cash, the other assets of the many subsidiaries will be auctioned off. This will likely include the rights to the name "Circuit City", the company's website and client list. While Circuit City is a damaged brand it is not a dead brand. It is possible to see investors coming in after the funeral to buy back the name and build back even a small group of retail stores to possibly cash in on the brand equity without having to save the grossly mismanaged chain.

The beginning of the end was when Circuit City fired their best sales people nearly five years ago. In an unthinkable move, it took the human resources that interact with their clients in ways that generated the most revenue and put them on the street to get short-term stock gains. In the mid-term the company died a miserable and avoidable death. You cannot outsource quality salespeople. You cannot replace trained, well paid and well-worth-the-money sales people with low-priced clerks as Circuit City did and they have learned that lesson the hard way. The very hard way.

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