(Updated) This morning there was some bad news from Circuit City HQ in Richmond, Virginia: The retailer is filing for Chapter 11 bankruptcy protection.

The news wasn't entirely unexpected. Bad news relating to expensive leases and a downturn in the economy surfaced months ago, and The Industry Standard's prediction about the company's precarious financial situation drew mostly negative bets from readers after it was created last week.

Chapter 11 gives the company room to breathe while it restructures its operations and financial obligations. Stores will remain open, and shelves will be stocked with merchandise. In a FAQ sent to The Industry Standard and other media outlets, Circuit City noted that Chapter 11 would "provide the company’s vendors with assurances that they will be paid for merchandise the company receives post-filing so we can be sufficiently stocked for the holiday selling season."

However, there are questions about how the Chapter 11 filing will impact the sale of big-ticket items, such as a TV, PC, or other components. Transactions will be straightforward, but there are service-related issues that customers will need to think through.

If you've bought electronics from Circuit City, Best Buy, Sears, or practically any other chain retailer, you are no doubt familiar with the post-warranty insurance and service policies that staff attempt to tack onto every sale. The pitches are sometimes pushy, and no wonder: They are an extra revenue stream for retailers, and can be very profitable. To a lot of people, they also provide piece of mind -- what if that $1,500 LG HDTV goes on the fritz on the 366th day?

But the country is in the midst of a terrible financial crisis. What if the restructuring is not successful, and Circuit City shuts its doors before the warranties' terms have ended?

Circuit City's FAQ suggests there will be no problems:

"We have made no changes to our Circuit City Advantage Protection Plans. In fact, our Circuit City Advantage Protection Plans are insured by third-party financial institutions, so consumers can be confident their plans will be in effect based on the terms of the contracts." 

That is reassuring, but it still leaves some uncertainty for consumers. If Circuit City were to go belly up, how would the insurers honor the extended warranty?

Circuit City told me that one of warranty insurers is GE Assurant. GE's Warranty Management Group was recently acquired by Assurant. I am trying to confirm whether Circuit City extended warranties are now covered by Assurant, and what it would mean for consumers holding them in the event of Circuit City shutting its doors for good.

Anecdotal evidence suggests getting some insurers to honor warranties from shuttered retailers could be difficult. Web complaint sites and other forums are already filled with tales of people who felt they were burned by extended warranties, even when dealing directly with retailers. But the complexities seem to be multiplied when dealing with an insured warranty issued by a retailer that's no longer in business. Garrick Hileman, the Industry Standard's director of strategy and business development, recently had to deal with GE Assurant when attempting to have a tweeter in a high-end speaker repaired. He had purchased the speakers in 2002 at Good Guys, a California electronics retailer that went belly up three years ago. His Good Guys' 10-year extended warranty was covered by GE Assurant, but he says the firm gave him the runaround when he first made contact.

"It was a nightmare initially until I could find the right department," Hileman says. Even worse, even though he had the original warranty certificate, his claim was initially rejected -- GE Assurant couldn't find a record of the warranty in its database. This issue that wasn't cleared up until an agent thought to check Hileman's old address in Seattle against its records. Even once they did agree to honor the