In an unsurprising move, RadioShack has become the latest retailer to file for relief under Chapter 11 of the Bankruptcy Code. RadioShack filed on February 5, 2015 along with 17 of its affiliates. The cases are jointly administered under Case Number 15-10197 and presided over by Judge Shannon. The emergency first day motion was held on February 6, 2015, and a further first day hearing will occur at 9:30 on February 9, 2015.
Pursuant to the Declaration of Carlin Adrianopoli in Support of First Day Pleadings (D.I. 17) (the “Declaration”), RadioShack has over 21,000 employees, 4,400 stores, and 100 million shares of stock. The goal of this bankruptcy is to “promptly reduce costs by closing up to 2,100 underperforming stores”. Declaration at *7. As a part of my practice is the defense of preference actions, I couldn’t help but notice that the Declaration contains a statement that “merchandise vendors reduced or declined to extend trade credit and/or offered less favorable payment terms.” Declaration at *13. One of the strongest defenses in a preference action is the “Ordinary Course” defense. As its name implies, the payment recipient must have acted in the ordinary course of the parties dealings. If you’d like to know more about how this, or any other, defense may apply to your situation, feel free to contact us.
If you want to stay up-to-date on the filings in this case, I’d recommend you keep an eye on the website created by RadioShack’s claims and noticing agent, Prime Clerk. The website contains a complete copy of the bankruptcy docket, free to download and view. The website is located at https://cases.primeclerk.com/radioShack/.
In the interest of full disclosure, my first computer was a Tandy, so I ask your forgiveness for any unintentional bias in this blog post.