Circuit City will sell its name to highest bidder

What's in a name?

For Circuit City, at least $6.5 million.

In a bid to make some money on the Circuit City Stores Inc. brand, trademark and Web site presence, the Henrico County-based retailer wants to auction off its reputation to the highest bidder.

The bankrupt consumer-electronics company named Port Washington, N.Y.-based Systemax Inc. as its stalking-horse bidder. A stalking-horse bid is an initial offer from a company chosen by the debtor, in this case, Circuit City.

"The Circuit City name and Web site still have value in terms of Web site visitors and the brand name," spokesman Bill Cimino said. "This is one asset that we knew could be sold."

It is not unusual for firms to sell the rights to their brand, said Tom Arnold, a professor of finance at the University of Richmond's Robins School of Business.

"In a bankruptcy, literally everything is for sale," he said. "If you can put value on it, the creditors of a bankrupt firm will be on it very quickly."

Systemax, which sells personal computers, consumer electronics and accessories online, through catalogs and in some retail stores, also has agreed to pay Circuit City a share of revenue generated through the Web site during the first 30 months of ownership.

"This is a good deal for the estate," Cimino said.

In a news release, Systemax said the deal would "extend its position as a leader in online retailing."

Circuit City is seeking approval of the agreement today in U.S. Bankruptcy Court in Richmond.

If approved, the deadline for bids is May 6. Competing bids must be $350,000 more than Systemax' initial offer, court documents show.

If competing bids are made, an auction will be scheduled for May 11 in the New York offices of Skadden, Arps, Slate, Meagher & Flom LLP, a law firm representing Circuit City.

A sale hearing is scheduled for May 13.

If Systemax does not win, Circuit City has agreed to pay it $250,000, as well as attorneys fees up to $75,000, court records show.

Systemax was one of two companies competing to become the initial bidder, court documents indicate.

Previously, The Hilco Organization, based in Illinois, had indicated interest in buying Circuit City's name and online presence.

Richard L. Kaye, executive vice president of The Hilco Organization, confirmed that his company, in partnership with Gordon Brothers Brands, is continuing in the bid process.

Hilco and Gordon Brothers bought the assets of bankrupt retailer Linens'N Things in February.

Contact Emily C. Dooley at (804) 649-6016 or .