Circuit City RIP

It seems certain now that Circuit City's bankruptcy proceedings are coming to an end as a liquidation, that hope for a reorganization and survival is gone.

The House subcomittee on commercial and administrative law, a panel of the House Judiciary Committee, had planned to take testimony from CC executives with an eye to potential amendments of bankruptcy law but that hearing was cancelled yesterday morning, apparently due to weather.

It appears that the executives wanted to complain largely about the way in which leases are treated under the 2005 amendments. It appears that before that year it was easier than it is now for a debtor to string out an old lease at the expense of its landlord.

Personally, I can't work up any sympathy for CC on that point -- unless there is something to it that I don't yet understand (very possible). But why should debtors be assistesd at the expense of their commercial lessors? Amending the law one way or the other on that point sounds like a zero-sum game to me.

[Subsequent interpolation, 3-5-09: The hearing has been rescheduled for 3-11, Wednesday, at 2 PM].

This is pertinent to general subject of this blog, the use of proxy campaigns to exercise power in and over the corporate suite ... how?

Circuit City is an example of a proxy partisan unheeded. It now appears obvious that the activist investors of HBK Capital Management were in the right a year ago, when they tried to get CC to sell itself to Blockbusters. That would have been the best way to maximize the equity that was then rapidly vanishing.