A Chapter 11 bankruptcy filing gives companies breathing room from creditors in order to regroup and relaunch. Circuit City started down this path in November, but in mid-January it decided that rehab was too tough and threw in the towel. The company's move signals an alarming trend: more firms are deciding to forgo the time-consuming work of restructuring their finances, and instead selling off the inventory and fixtures and folding their tents. Sharper Image, Linens 'n Things, retailer Steve & Barry's, the department store Mervyns. All filed for bankruptcy with the intent of reorganizing. And all have wound up liquidating. "The reason we're seeing liquidation rather than bankruptcy from so many retailers is because people are hopeless," says Dean Baker, codirector of the Center for Economic and Policy Research. "We're still looking at a very bad year in 2009 and probably most of 2010, so it's very difficult to be optimistic about reorganizing and coming out of it stronger."