Mervyns Chapter 11

Over the past 60 years, Circuit City has become one of the largest retailers of consumer electronics in the nation. Circuit City has many goals he wanted to achieve over the years. One was to provide better products and services to their customers to ensure a great shopping experience. Another was to give back to communities that kept their businesses running.

In recent years, Circuit City was one of the first companies to give back to the community, becoming one of their main attributes. While providing as much money and time to give back, unfortunately they were not doing well financially. Over the past two years, the Company recorded losses on their tax returns.

With the current economic crisis in the United States, and Circuit City is a major business in decline, they were forced to file for protection against Chapter 11 Bankruptcy in November 2008. By classifying Chapter 11, they hoped to win the opportunity to work things with their creditors and lenders trying to continue its normal activities. Meanwhile, Circuit City has taken the decision to close over 250 stores nationwide that were unprofitable to help them with their financial problems.

Over the past two months, they could not reach agreement with creditors and potential lenders and to organize a continuity, requiring them to seek court approval for January 16 to close the rest of their 567 stores in the United States. These closures resulted in leaving more than 34,000 employees unemployed.

One of the largest retailers in the country has been victim of the growing financial crisis that has allowed the United States, declaring a recession. A transaction approved increasing concern has been the main factor that prevented the Circuit City to close their doors after many years of serving millions of consumers.

Yet, many people might wonder why an operation continuity caused Circuit City to stop their operations. What is this transaction that Circuit City could not prove? The Financial Accounting Standards Board, the concept of business continuity is to assess whether there is substantial doubt about the entity's ability to continue operating for a reasonable period of time. Circuit City has not been able to satisfy their current and potential creditors and lenders that the company could operate without the possibility of going out of business.

As consumers and investors, I now fear that many companies have the same problems to prove their lenders and creditors that they will be able to last through turmoil before them. I never thought a company like Circuit City would never be in a situation that there was doubt when it was their business sustainable. As you can see that their lenders and creditors felt that there was no chance to continue because they could not reach an agreement.

A company like Circuit City being in a place like this one shows that any company can be in the same exact position. There were small businesses like Linen N 'Things and Mervyn's which were in the same situation and have been unable too to survive in our economic situation.

The question is how can we as consumers feel more confident in the fact that our economy will get better if there are companies who have been here for many years are forced to close because they are not able to demonstrate the ability to function in the long run. Each time a company closes its doors, there are people who are unemployed.

As an investor, how do I suppose to have confidence in investing my time and money in companies that are unable to provide assurance about their financial security in their business for years Upcoming ..