RICHMOND, Va. — Circuit City Stores Inc. on Monday received final approval for $1.1 billion in financing to keep operating while the nation's second-biggest electronics retailer is in Chapter 11 bankruptcy protection.
U.S. Bankruptcy Judge Kevin Huennekens approved these debtor-in-possession loans at a hearing in Richmond. The financing, which replaces a $1.3 billion asset-backed loan the company had been using, will be used to stock merchandise and pay employees.
Richmond, Va.-based Circuit City filed for bankruptcy protection last month as it faced pressure from vendors and consumers who aren't spending.
Lexington, Ky.-based printer maker Lexmark is among Circuit City's top 50 creditors, according to the filing, and is owed nearly $3 million. Circuit City's largest creditor is Hew lett-Packard at $118.8 million.
Gregg Galardi, an attorney for Circuit City, said that since the company filed for bankruptcy, its sales have been hurt by the weak consumer spending environment and are down between 40 percent and 50 percent. Earlier this year it announced it would close 20 percent of its stores, including its Nicholasville Road location in Lexington.
Galardi called the financing and restructuring efforts a "bridge to somewhere" and said the company is still pursuing the sale of all of its assets.
Circuit City, which has posted losses for seven of the last eight quarters, plans to keep operating while it develops a reorganization plan to deal with significant declines in traffic and heightened competition from rival Best Buy Co. and others.
The company, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, hopes to emerge from court protection in the first half of next year.