End-of-week Battering for Well-known Brands

Circuit City announces liquidation, while Checker and the parent of Black Angus Steakhouse go bankrupt.
Stephen TaubJanuary 16, 2009

Three well-known consumer names have either filed for bankruptcy or announced plans to liquidate.

All three companies have operated in some of the most intensely competitive industries, where bankruptcies have been especially commonplace.

Circuit City Stores, which filed for bankruptcy protection back in November, announced plans to liquidate all of its assets. The electronics retailer said it was could not complete a deal to keep the company afloat.

“We were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company,” said James Marcum, vice chairman and acting CEO.

Roughly 34,000 people will lose their jobs as the company closes down and liquidates its 567 remaining stores.

The company said it does not anticipate any value will remain from the bankruptcy estate for the holders of the company’s common equity.

Meanwhile, Checker Motors, which once made the well-recognized Checker Taxi Cab, filed for bankruptcy.

The auto parts company blamed high labor costs and declining vehicle sales by customers including General Motors, Bloomberg reported, citing court filings.

The 87-year-old company listed assets of $24.5 million against debt of $21.8 million, according to the wire service.

Workers “dedicated their careers to the debtor with an expectation of compensation and working conditions that the debtor can no longer afford and that are no longer supported by the market,” COO Mark Walburn said in court papers, according to the report.

Elsewhere, ARG Enterprises, which operates 69 Black Angus Steakhouse restaurants in seven Western states, filed for Chapter 11 protection. The company reportedly said it is seeking a buyer.

It has between $100 million and $500 million in both assets and liabilities, according to a Bloomberg report.

“The debtor’s restaurants primarily are located in some of the areas hardest hit by the mortgage crisis, causing consumers in those markets to cut back on discretionary spending,” Lisa Poulin, ARG’s chief restructuring officer, said in a statement filed with the bankruptcy court. Some parties are interested in acquiring ARG’s assets, she added

The company has $53.1 million in secured debt and $13.2 million reserved for outstanding letters of credit, according to Bloomberg.

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