Judge allows Circuit City to pay former employees

A U.S. Bankruptcy judge is allowing Circuit City to continue paying nearly 600 employees laid off at its headquarters before it filed for bankruptcy protection.

The nation's second-biggest consumer electronics retailer was in court in Richmond on Friday for hearings related to its Chapter 11 bankruptcy case. Circuit City filed for protection last month as it faced pressure from vendors and consumers who aren't spending.

The committee representing the company's unsecured creditors had asked the judge to cease payroll payments and benefits to 588 employees laid off in early November. Judge Kevin Huennekens ruled against that.

He approved an agreement between Panasonic and Circuit City. The judge was also scheduled to rule on whether Circuit City could abandon or reject 150 leases at locations where it no longer operates stores.

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