Circuit City files for Chapter 11

NEW YORK - Circuit City Stores, the nation's second-biggest electronics retailer, filed for bankruptcy protection today but will stay open for business as the holidays approach.

It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a financial reorganization plan.

The Richmond, Va.-based retailer, which operates about a dozen stores in the Philadelphia region, has been struggling as nervous consumers spend less and credit has become tighter. The announcement came a week after it said it would close 20 percent of its stores and lay off thousands of workers.

The company said it decided to file because it was facing pressure from vendors who threatened to withhold products during the busy holiday shopping season.

Circuit City said it had secured $1.1 billion in loans to provide working capital while it is in bankruptcy.

It had $3.4 billion in assets and $2.32 billion in liabilities, as of Aug. 31.

Circuit City Stores Inc. announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta.

None of the doomed stores is in Pennsylvania, South Jersey or Delaware, the company announced earlier this month; the closest are around Baltimore and in Freehold, N.J. Most are in Arizona, California, Georgia, New York, Ohio and Texas.

The company is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.