Circuit City Punching Out

[ruthless]

Looks likie CC is going broke. Saw the 70-300G for $520. Gonna keep an eye on it to see if it drops further.

[KevinBarrett]

I haven't seen any good prices at my local Circuit City. They carry a200, 300, 350, and a700 bodies, 55-200 and 75-300 zooms, and an F42 flash. The only "deal" among them is the flash, which is at $209 (it is available online at $204 from Amazon). They have one of the starter kits (overpriced "alpha" branded camera bag and a battery) at 30% off, making it marginally more expensive than Sony's full retail price for the battery. I'm hoping they'll get a little less stingy in weeks to come. Almost none of their Alpha stuff is moving in the mean time.

[bakubo]

With SURE how can they sell anything for less than what Sony dictates?

[KevinBarrett]

With SURE how can they sell anything for less than what Sony dictates?

They're going out of business! What's Sony going to do, stop shipping to them?

[David Kilpatrick]

Sony has lost millions in this closure. Whatever you pay for CC stocked goods, Sony gets zilch.

David

[KevinBarrett]

Is that to say Sony isn't paid for the items until Circuit City sells them?

[Dusty]

They're in bankruptcy. Every dime above operating costs goes into a pot that's proportionally split amongst the various creditors.

Dusty

[bakubo]

They're in bankruptcy. Every dime above operating costs goes into a pot that's proportionally split amongst the various creditors.

So, you are saying that Sony doesn't care about SURE in that case?

[Dusty]

In bankruptcy, all contracts are subject to the bankruptcy court's whims. Sony doesn't have a leg to stand on in this case.

The bankruptcy court's ability to override contracts is one of the main reasons the UAW want a Big 3 bailout. If they went into bankruptcy, the court would invalidate the union contracts and re-write them according to it's 'wisdom'.

Dusty

[Javelin]

Yes the only way Sony could have come out of the CC situation with all their money is if the equipment was "floor planned" for example a company that does this was/is Borg warner. if your store doesn't have enough money to buy the inventory you go to BW and they buy it for you and you pay them a premium depending on how long they were carrying your inventory costs as you sold off that inventory. I seriously doubt a chain the size of CC was operated this way. This is something small retailers can do. CC likely would have had credit directly from Sony and in that case Sony loses. As far as SURE is concerned, Sony's only recourse on that was to not sell them product or hold back on things like co-op advertising volume rebates ect. those things can hurt a store that is trying to do business, but since CC is essentially gone and the liquidators don't intend on doing further business Sony has no power over them. CC was here in Canada for a few years and went bankrupt too. I think the liquidators for that must have made a deal with another retailer for all the inventory because they sure cleared out in a hurry and there weren't many deals to be had.

[Dusty]

CC is still in Canada as The Source. I know they bought out Radio Shack in Canada, but don't know if those are the same stores or if they're still using the RS name up there.

Dusty

[David Kilpatrick]

In the UK I have seen countless liquidations and bankruptices includes several of my clients - I am still surprised to consider that when I was only 27 and just three or four years into self-emloyed business, I somehow survived a liquidation which left me owing the Sunday Times £4,500 (the price of a small terraced house or a luxury car at the time). I guess I was able to because the fees we received back then were so high relative to today, you could earn enough to buy the car in a single month, and one single day of ordinary industrial photography or studio shooting was worth a month of regular average wages.

Anyway, I have only ever once received a dividend from a liquidated company where I had a claim, and that was a cheque for about a tenth of the sum owed, three years later. The liquidators' fees ate up every single penny which was not owed to the government, in every other case. Sometimes the liquidated firm had £1/4m in assets and property, and it would all just go straight to the receivers in fees, strangely managing to pay the taxes and statutory stuff like preferred bank creditors first. It is uncanny how whatever is left over always neatly covers the carefully listed hours of time stated by the administrator/liquidator when you get the final statement.

Many UK photo importers have clauses (which may perhaps be illegal in the USA?) stating that they retain title to all goods not paid for in full, so in theory they can come in and collect their stock back. In practice they can't as the liquidator locks the doors and won't let them, and the stock goes into an inventory for disposal. The worst side of this is how it can affect the private seller. We have had readers who left entire camera outfits on consignment with dealers who went bankrupt, and found that the receivers effectively seized their property despite the shop not 'owning' it and only having it there as a commission sale. Others had paid in full for goods, never delivered, and the receivers refused to refund their payment because - guess what - they were not secured creditors.

The whole UK system stinks, the rules were written only to protect the government from losing tax revenue, and to provide unacceptable levels of remuneration for a small clique of specialist accountancy firms at the expense of suppliers and customers. It would take a week or two for a committee to formulate half a dozen new over-riding rules, protecting consumers, guaranteeing return of goods held in trust or on sale-or-return, and ring-fencing goods delivered by suppliers but unpaid for to enable their recovery and the cancellation of the invoices involved.

To give you an idea how bad it is, several friends of mine with small companies have been forced into liquidation over the years. Some of them had spent many thousands in advertising or photographic services with me, but at the end, maybe owed me £500 or so unpaid. In such cases, I have simply raised a credit note and sent it to the liquidator saying the invoice is now cancelled, your client has been a personal friend for many years, please accept this credit note and reduce their liabilities accordingly. In every case I have been told this contravenes the rules and they are unable to accept my cancellation of the debt. One of these people lost his house and his business, I received a schedule of the creditors (as ever creditor does) and called those I knew to suggest they also send credit notes - after all, they were never going to get a penny. That action nearly landed me in court.

Of course none of these cases were on the same scale. Most were small personal failures, some - like the repeated serial liquidation of Paterson Photographic's incarnations - were appallingly bad management created by 'investors' without any industry knowledge taking over control.

David

[Dusty]

David, in US bankruptcies, IF you can prove that you own something the creditor has, you have the right to get it back. Just be quick about it, or it could be gone. Consignment sales would be such an instance.

However, when a company like Sony gives CC items for sale, they do it with deferred billing - giving them 30, 30 ,90 or even 120 days to pay. While that gives the seller the breathing room to sell the stock before paying for it, our system looks at that as a loan. In essence, CC has title to the stock, so Sony can't get it back.

I agree that the bankruptcy system leaves a lot to be desired. Why can a company continue to pay mega-bucks to executives who ran the company into the ground while they're undergoing bankruptcy? Why can't there be wholesale liquidations of normal sale items so that there is no eating up of all monies through liquidators fees and services?

Bankruptcy even takes precedence over lawsuits, including personal ones. I know a guy who was getting divorced in a small town where his lawyer was the judge's legal partner. He kept trying to hide assets and jack around his wife until finally the judge had had enough and was going to compel him to disclose everything. He decided to short circuit the judge by declaring bankruptcy to keep his business assets from getting thrown into the personal ones. Bad move! He didn't realize that meant his divorce was now in the hands of a no-nonsense Federal Bankruptcy Judge. In the end, he got what was coming to him!

Dusty

[stevecim]

In Australia, with bankruptices , secured creditors i.e banks holding loans, get first dids on any money, unsecured creditors, ie services/stock supplies get whats left over. I know been their, had a client close business on me, they owed 7K, once all the banks got paided, I was offered 1 cent on the $. Not worth spending the time filling out all the forms needed to colect