RadioShack Files for Chapter 11 Bankruptcy, Plans to Sell Stores to Sprint
FORT WORTH, TEXAS – RadioShack (NYSE: RSCH) filed for Chapter 11 bankruptcy Thursday after years of struggling with sluggish sales and competing against online retailers. General Wireless agreed to acquire between 1,500 and 2,400 RadioShack U.S. company-owned stores. This acquisition facilitated the bankruptcy filing from RadioShack and some of its U.S. subsidiaries.
General Wireless is an affiliate of hedge fund Standard General L.P. It is also Sprint’s biggest shareholder. The sale agreement is subject to court approval and other conditions.
RadioShack’s foreign subsidiaries and its franchisee-owned stores are not included in the filing. Other parties will also have an opportunity to submit offers for RadioShack’s assets in a court-approved process.
General Wireless has partnered with Sprint to create a new dedicated mobility “store within a store” retail presence in up to 1,750 of the acquired stores.
RadioShack currently has about 4,000 company-owned stores in the U.S. The stores that aren’t purchased by Sprint and its affiliates will close through a deal with liquidation firm Hilco Merchant Resources.
The 94-year-old RadioShack was suspended from the New York Stock Exchange on Monday. It was known for selling break-out successes, such as the all-electronic calculator and one of the first mass-marketed computers back in the 1970s. Unfortunately, the company had posted losses for the past 11 quarters.
RadioShack was founded in 1921 by two brothers, Theodore and Milton Deutschmann, who sold equipment for ham radios. The name was inspired by the slight, wooden structure that contained a ship’s radio supplies and equipment.
RadioShack’s legal advisor is Jones Day. Its investment banker is Lazard Freres, while its financial advisors are the MAEVA Group and FTI.
Click here for a list of stores slated for closing.
— Nellie Day