Circuit City, the nation's second-biggest electronics retailer, filed for bankruptcy protection Monday, just a week after it announced it would close 20 percent of its stores and lay off more than 7,000 workers.
"Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders," Chief Financial Officer Bruce H. Besanko said in the filing.
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The company is hoping to exit court protection by early summer 2009, putting it in a position to find a buyer for the chain or operate as a standalone business.
Its shares fell 14 cents, or about 56 percent, to 11 cents Monday before being halted.
The announcement is a blow to Lexington-based printer maker Lexmark International, which has partnered this year with the chain to pitch its wireless inkjet printers.
Lexmark is also among Circuit City's top 50 creditors, according to the filing, and is owed nearly $3 million. Circuit City's largest creditor is Hewlett-Packard at $118.8 million.
"It's a big difficulty for Lexmark in terms of their inkjet printer business," said Larry Jamieson of printer industry tracker Lyra Research. "Circuit City's not doing anything with lasers, so that's the good news."
Jamieson said if Circuit City closes its underperforming stores and emerges as a stronger company "it might not be so bad for Lexmark.".
Circuit City has had only one profitable quarter in the past year. It's faced significant declines in traffic and heightened competition from rival Best Buy Co. and others.
While the retail industry overall is facing what's expected to be the weakest holiday season in decades, Circuit City's struggles have intensified as nervous consumers spend less and credit has become tighter.
U.S. Bankruptcy Judge Kevin Huennekens granted Circuit City interim approval to secure $1.1 billion in debtor-in-possession loans while it is in bankruptcy protection. Those funds, needed to stock merchandise and pay employees, replace a $1.3 billion asset-backed loan the company had been using.
Final approval of the motions will be addressed at a Dec. 5 hearing in Richmond, Va.