Circuit City receives more financing for its operations while bankruptcy proceeds

Circuit City Stores, Inc. (NYSE: CC) has received a new line of $1.1 billion in financing to help it stay afloat as it navigates through Chapter 11 bankruptcy. A court approved the financing, which will replace a $1.3 billion asset-backed loan the company had previously been using.

How Circuit City will emerge from bankruptcy is anyone's guess. When it does, the American economy will still be in the throes of a recession and the name "Circuit City" will still be a black eye on the company from any consumer's perspective. Gregg Galardi, an attorney for the troubled company, indicated that sales at the retailer have plummeted 40% to 50% since the bankruptcy filing, according to The Associated Press.

At a local Circuit City in my area that is closing, the inside looks like a flea market more than any kind of retail operation. There's just a few flat-screen televisions left along with some digital cameras -- and the discounts aren't even that great. Perhaps all the good discounts have already walked out the door tucked under customer's arms. Regardless, the company will keep the new financing to pay employees and utility bills while it reorganizes and continues shuttering under-performing locations over the next few months. That is, until it reorganizes as a "new" entity and the customers still don't show up.