Circuit City. Linens 'N Things. Bombay Co. They're all out of business, their stores shuttered, many employees laid off. But according to their old Web sites, they're all still selling, or planning to sell, the same stuff they always did — everything from digital picture frames to leopard-print rugs.
How can this be? Didn't these companies shut down?
Typically, when a company goes out of business by way of bankruptcy, other companies buy its assets — everything from cash registers and furniture to unsold merchandise. Also for sale are assets like the company's name, logo and Web site — some experts say a name still has value even if the company has gone belly up.
That's why a store chain's Web site can live on — largely unchanged — after the company has gone under.
Electronics retailer Circuit City, which closed the last of its 567 stores in March, is one of the most prominent names that's gone under. Online retailer Systemax Inc. bought the Circuit City brand and Web site, www.circuitcity.com, in May. The company sells the same types of products that Circuit City did, like flat-panel televisions, computers and the Nintendo Wii, and says on its site it offers a wider selection than Circuit City had in its stores or online.
The Linens 'N Things brand also is still selling. The home goods retailer went out of business this past winter and in February a company called LNT Acquisition LLC bought the Web site LNT.com and the Linens 'N Things brand name, according to the Web site. It still sells items once found in the chain's stores, like dishes and bedding, and has since added more premium brands, like Calvin Klein and Laura Ashley, according to the site.
How does a name survive after the company has died?
Companies buy up the names in bankruptcy, often for very little money. In the case of Circuit City, Systemax bought the fallen company's trademarks, domain names, customer lists and other information related to the online business for $14 million in cash plus a share of future revenue over 30 months.
Companies in bankruptcy protection want to come up with as much money as they can, so they'll take whatever they can get for their assets.
Before buying from a phantom retailer, consumers should do research and look at policies for returns and warranties, since they may not be the same as under the old ownership, said Edgar Dworsky, a consumer advocate and founder of ConsumerWorld.Org, based in Somerville, Mass. Companies aren't required to say on these sites how the ownership has changed, though he said they sometimes do in fine print.