Hearing Could Either End RadioShack’s Bankruptcy or Place them Back on the Chopping Block
RadioShack is facing a tense moment in its bankruptcy case as an upcoming hearing could either allow them to accept a winning bid, which would bring an end to the bankruptcy case, or deny the bid as a sham, forcing them to continue looking for a way to end their bankruptcy.
RadioShack hasn’t been able to turn a profit since 2011. In February of this year, they declared bankruptcy, hoping for a way to cut their losses and move on.
Recently, the hedge fund Standard General LP had offered a bid valued around $160 million, which would have kept 1,743 stores open, as well as allowing some 7,500 employees to keep their jobs. The payment would have mostly come from a credit on the debt that RadioShack already owes. Through the bid, Sprint stores would have ended up being placed within RadioShacks acquired by General Wireless, a newly-formed affiliate of Standard General.
Salus Capital Partners, however, is calling shenanigans on the move, claiming that it’s a sham where Standard General cut them a deal. Along with other pre-bankruptcy lenders, Salus, who has a $150 million claim in RadioShack’s debt, making them the company’s largest creditor, are claiming that Standard General isn’t even eligible to bid. They are arguing that RadioShack must first compensate them on legal arguments concerning litigation liabilities from RadioShack’s unsecured creditors concerning pre-bankruptcy loan deals, or from the complaint filed by Salus against its clients and Standard General.
RadioShack’s attorney, however, claims that Salus’s earlier bid of around $271 million was rejected because $129 million of it is completely contingent on if they can win a dispute against the rights of other pre-bankruptcy lenders.
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