They say that death is not a moment, but a process that is not easily defined.  The same can be said for the corporation.  Once in the death throes at what point is a business officially dead?

Is it when a balance sheet is destroyed by debt with liabilities that cannot be paid?  Is it when customers no longer want to shop in your stores and sales plummet? 

Is it when a judge tells you its dead in bankruptcy court?

I’ve said many times that it is quite difficult to kill a company in the United States.  We do not like to see our businesses fail and as such policies are set in a way to allow companies to survive for much longer than they otherwise should.

Management too, with a paycheck on the line, is also reluctant to let a company fail.  CEO’s will beg, borrow and steal to keep the doors open.

At some point though there is a point of no return.  There is a moment in time when companies are beyond repair.  They should be allowed to fail.

Then again, investing in that company that is on life support can offer investors huge returns.  Should a resurrection occur, those acquiring shares at the darkest hour are poised to benefit greatly.

It’s a high risk, all or nothing approach that can pay big dividends or result in total loss.  If you have the stomach for such investing, you might want to consider adding companies on the precipice.

One name to consider would be Circuit City Stores, Inc. (CC).  This company has been on life support for years and yet somehow they still survive.  Today that survival has never been more in question.

The company announced that it will be closing 155 stores as a result of unprecedented economic crisis and spending retrenchment.  In addition to announcing store closings, the company stated that vendors are tightening the noose with some demanding payment in advance of delivery and others reducing credit lines.

The death rattle has become much louder.  CC stated that it had hired a bankruptcy advisor and a liquidator.  It certainly looks like all is lost for the company.  Of course in liquidation the common stock holders are the last to get paid.

Will there be anything left at this point?

It is difficult to say, but investors are cheering the news today.  CC, in danger of being delisted, hires a bankruptcy advisor, closes 155 stores and the stock is up some 35% on the day.

Of course it doesn’t take much for that kind of gain when shares trade for $0.25 per share, but the move is significant nonetheless.  I would say most of the gain is short covering while some of the move can be attributed to pure speculation.

Who knows, this company may survive after all.  Things are pretty bleak, but as they say that is the time to buy.  Now to be sure buying now is about as high a risk you can take in the equity market.

Owning CC today may result in losing everything.  Then again if they can survive the nose dive, you would be rewarded handsomely for taking that risk.  Tread carefully.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.