Circuit City Final Liquidation Plan Scheduled for Court Hearing This Week
The final chapter in Circuit City’s history may be written this week as a final liquidation plan comes before a bankruptcy court judge. The defunct chain is asking U.S. Bankruptcy Court Judge Kevin Huennekens, Richmond, Va., to approve a plan that would pay unsecured creditors 10-32 percent of what they were owed when Circuit City filed for bankruptcy in November 2008. The original plan, filed Sept. 29, called for unsecured creditors to get a maximum of 13.5 percent.
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A hearing on the new plan, which was filed Aug. 9 after nearly a month of mediation, is scheduled for Wednesday. The general unsecured claims total $1.8-$2 billion, down from an original $4.7 billion, Circuit City said. The amount of miscellaneous secured claims that were entitled to a cash payment or reserve was slashed to $7 million from $4.7 billion. Circuit City paid off all but $5-$20 million of secured claims with proceeds from the 2009 liquidation of its 721 stores.
The move to get court approval also was helped by Circuit City getting in March a $125 million federal tax refund. Circuit City received $103.5 million of the refund with the IRS retaining $22 million pending an audit of Circuit City for 2007-2008. The refund partly due to a federal law that took effect in November that allows companies to carry back net operating losses for up to five years, Circuit City said in court documents. Circuit City’s former Intertan Division in Canada, which also filed for bankruptcy, had paid “nearly all claims” in full with interest as of July 1, Circuit City said.
Eastman Kodak has objected to Circuit City’s amended liquidation plan, arguing that a definite date for implementing it needed to be set. Without changes being made to establish a date, the plan “will be controlled by one or more” of its supporters “or by parties outside of the court’s jurisdiction,” Kodak said.