On November 10, 2008, Circuit City Stores, Inc. (“Circuit City”) filed for reorganization relief under Chapter 11 of the United States Bankruptcy Code. Slightly more than two months later Circuit City announced abandonment of its plan to reorganize. Instead, Circuit City will liquidate all of its assets.
What does this liquidation of Circuit City mean in terms of the potential for bankruptcy preference claims?
We have looked at the financial and other public information available. Our preliminary assessment is that the Circuit City liquidation has the potential create a massive number of bankruptcy preference claims.