RICHMOND, Va. --- Facing pressure from vendors and consumers who aren't spending, Circuit City Stores Inc. filed for bankruptcy protection Monday as it heads into the busy holiday season with hopes that the move will help it survive.

Under Chapter 11 protection, the nation's second-biggest electronics retailer can keep operating while it develops a reorganization plan. Its Canadian operations filed for similar protection.

The company also said it cut 700 jobs at its Richmond, Va., headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

In court documents, Chief Financial Officer Bruce H. Besanko cited three factors: erosion of vendor confidence, decreased liquidity and the global economic crisis.

"Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders," Mr. Besanko said in the filing.

Its shares fell 14 cents, or about 56 percent, to 11 cents Monday before being halted.

Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy and others. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers.

While the retail industry overall is facing what's expected to be the weakest holiday season in decades, Circuit City's struggles have intensified as nervous consumers spend less and credit has become tighter.

At a hearing in Richmond, U.S. Bankruptcy Judge Kevin Huennekens granted Circuit City interim approval to secure $1.1 billion in debtor-in-possession loans while it is in bankruptcy protection. Those funds, needed to stock merchandise and pay employees, replace a $1.3 billion asset-backed loan the company had been using.

Circuit City also was granted interim approval to abandon 150 leases at locations where it no longer operates stores, which it said costs $40 million annually.

The company, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, is hoping to exit court protection by early summer 2009, putting it in a position to find a buyer for the chain or operate as a standalone business.

Final approval of the motions will be addressed at a Dec. 5 hearing.

Circuit City is a well-known brand and could re-emerge, Stifel Nicolaus & Co. analyst David Schick said in a note to investors.

"We believe the marketplace has a slot for a higher-end chain with a commissioned sales force," he said.

But Stephen Lubben, a professor at Seton Hall Law School, said Circuit City's survival depends on whether its creditors work with the company "or whether they think they're a lost cause and cut them off permanently."

JPMorgan analyst Christopher Horvers agreed, saying it boiled down to merchandise: "If they can get inventory into the stores, I can think they'll remain competitive."