Serving as an illustration of the principal that a financial restructuring won’t save a business that has ceased to be frequented by customers, RadioShack has filed for bankruptcy for the second time in as many years. The prior case was filed in the Bankruptcy Court for the District of Delaware as case no. 15-10197. This case is also in the Bankruptcy Court for the District of Delaware, and is case no. 17-10506. Prime Clerk is the noticing agent in both cases and maintains a copy of the Court’s docket on its website – http://www.primeclerk.com/case-archive/.
The first bankruptcy had three primary results: 1) RadioShack closed approximately 2,400 stores, 2) the remaining stores were sold as a going concern to General Wireless, Inc., and 3) an agreement was entered into with Sprint, providing for co-branded product, exclusive access for Sprint within the RadioShack stores, and the payment of a portion of RadioShack rents by Sprint.
At the time of this second bankruptcy filing, there were over 1,500 stores in operation. According to the first day declaration of Dene Rogers (the “Rogers Declaration”) in support of this bankruptcy, RadioShack is again seeking to shed underperforming leases and pursue a sale or restructuring. As part of this process, it has transferred 115 stores to Sprint in exchange for a $12 million payment and the termination of the Sprint agreement, with the possibility of receiving another $5 million following an investigation period.
RadioShack has sought authority to close and liquidate the inventory of “between 530 and substantially all of their stores.” See Rogers Declaration at 22. Accordingly, creditors will want to keep close tabs on this case to make sure that any debts owed or claims they may have are not eliminated.
John Bird is a bankruptcy attorney with the law firm of Fox Rothschild LLP. John is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach John at (302) 622-4263 or at email@example.com.