Jenni Edwards
Business Law 2
Professor Rose
July 22, 2015
RadioShack
Nearly 94 years ago in Boston, Massachusetts RadioShack was founded on February 6, 2015. It is one of America’s oldest retailers that specialize in electronics. The retailer survived the Great Depression by branching out to the mail order economy. During an economic downturn, RadioShack was purchased by Charles D. Tandy for $2.3 million dollars in order to avoid bankruptcy. Throughout the 70s and 80s, RadioShack thrived, as it was the first to offer a cellular phone and satellite dishes.
At its peak, RadioShack operated over 7,000 retail stores in the United States. However, in the late 90s RadioShack’s parent company, Tandy Electronics sold its computer business which …show more content…
This is RadioShack’s 11th consecutive loss in a row. RadioShack filed for a Chapter 11 Bankruptcy in Wilmington, Delaware. Corporations that are burdened with heavy debt most commonly use a Chapter 11 bankruptcy. By filing a Chapter 11 bankruptcy RadioShack will have the opportunity to propose a plan to cut costs and create revenues to keep the debtors at bay. It will allow them the time they need to reorganize and restructure.
The first thing RadioShack had to do was file a petition with the Bankruptcy Court. As soon as the petition is filed, they have an automatic stay so creditors cannot continue to pursue their collections against them. RadioShack will continue its business and its stores will stay open. As RadioShack is reorganized and restructuring, they must submit monthly operating reports to the Bankruptcy Court to update them of their progress. The goal of RadioShack’s reorganization is to become profitable again and have the Bankruptcy Court confirm their reorganization plan. …show more content…
RadioShack owes its creditor Salus Capital Partners $150 million. During this auction, they were bought by hedge fund Standard General for 160 million. Standard General plans to keep and operate the 1743 stores that can be salvaged. By salvaging the stores, they are keeping more than 7,000 jobs for Americans. This is made possible by an alliance with Sprint to bring their services and plans to the stores to sell in house.
However, RadioShack owes Salus Capital Partners $150 million dollars. They claim that the auction was merely a ‘charade’. Salus Capital stated that they would pay $271 million for all of RadioShack’s assets. (WSJ) However, the U.S. Bankruptcy Court in Wilmington, Delaware had the final say on this. While Salus claimed it was not given a fair chance and tried to keep Standard General from making the deal the judge denied their