November 11, 2008
Circuit City First Day Declaration
Circuit City filed 21 "First Day Motions" yesterday with its petition. The Declaration of Bruce Besanko, Chief Financial Officer of Circuit City can be accessed here. The declaration is supposed to support the motions and give an overview of the case, the problems that caused the filing, and generally introduce the parties to the Court, the creditors, prospective creditors and the media. This one is less useful than most since there is very little financial information and the rest is pretty general and a little political. There is an interesting expose on the attempted (and apparently successful) takeover of the Board of Directors and ousting of top management in 2008.
There is a request to approve $900 million of DIP financing as well as a strange comment that management was expecting a $75 million refund from the IRS and that somehow hurt big time when it didn't come. I assume that amount is a couple of payrolls at most. The declaration says: "The Company was optimistic that if the refund arrived promptly, the refund would address immediate short-term liquidity needs and allow the Company to further investigate out-of-court restructuring alternatives. Notwithstanding indications from the Internal Revenue Service, the Company has not yet received the refund."
These first day motions do make me wonder what army spent how long getting them altogether to file on the first day. There have to be hundreds of man-hours of time by both the lawyers and the debtor's staff putting these together. The paperwork for a billion dollar DIP financing transaction alone is more than my little head can comprehend.
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