Radio Shack Avoids Total Liquidation
International Business Times
Published Mar 31, 2015 10:26PM ET
Updated Mar 31, 2015 10:45PM ET
Radio Shack Avoids Total Liquidation
By Max Willens -
America’s one-stop shop for batteries and phone chargers will survive, albeit in a much-reduced form. A bankruptcy judge in Delaware approved a bid from hedge fund Standard General that will keep the troubled electronics retailer from total liquidation, according to a report in the Wall Street Journal. Standard General’s offer for the company, a $160 million mix of cash and debt, will preserve more than 1,700 stores and some 7,500 jobs. About 2,300 stores will close.
Today’s deal brings to a close a contentious auction process that had gone on for more than a week. Rival bidders accused Standard General, which was one of RadioShack’s largest creditors, of using “machinations and manipulation” to ensure its debt-heavy bid was selected; less than $50 million of Standard General’s bid was cash, which drew objections from Salus Point Capital, whose own cash-heavy bid totaled $150 million. “Salus is not prepared to put new dollars into an auction that has been undermined,” Salus counsel Anthony Clark wrote in a letter sent to the judge overseeing the auction.
This was not the first time Standard General has been accused of manipulating its relationship with RadioShack (OTC:RSHCQ) for its own benefit. Earlier this year, the hedge fund was accused of artificially delaying RadioShack’s bankruptcy so it could cash in on a number of derivatives. It was also accused of using its status as a preferred lender to take on RadioShack store leases at prices far below market rate.
The remaining locations will now become co-branded Sprint stores, a fine overlap for the inventory that RadioShack had begun peddling after consumer appetite for its products began drying up. Standard General is also a Sprint creditor.
RadioShack filed for bankruptcy in early February after months of sliding profits had reduced the retailer to a punch line so sad that John Oliver felt compelled to stick up for them on a recent episode of “Last Week Tonight.”
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Written By: International Business Times
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