In the bankruptcy auction for the smoldering remains of RadioShack, only one bidder is interested in keeping the chain open as a business. That’s Standard General, which also happens to be the lender that bailed out the company last year in a last-minute attempt to save the business.
Standard General plans to buy out 1,723 of RadioShack’s stores, and plans to run them in a co-branded venture with Sprint.
The offer for remaining stores from Standard General is $145.5 million, while RadioShack’s debts total more than $500 million. To cover the rest of those debts, they’ll have to sell other assets at auction, including remaining leases and inventory, corporate facilities, and anything else that the former Radio Shack management has sitting around. The estimate is lower than the original “We’ve gone from selling a Bentley to selling a Ford to selling a used Vespa,” a lawyer for one of the lenders said of the bankruptcy auction.
The auction takes place at noon on Monday. Other bidders who might bid for pieces of the company intend to sell off everything and shut down the RadioShack business entirely instead of trying to run a smaller chain of electronics stores.
Standard General is using the money that RadioShack owes it as a form of currency in the bankruptcy auction, something that junior (unsecured) creditors in the bankruptcy auction find problematic. Junior creditors have been questioning Standard General’s actions in the runup to declaring bankruptcy.
Standard General Says Its Bid Is RadioShack’s Sole Hope of Survival [Wall Street Journal]
by Laura Northrup via Consumerist