America’s one-stop shop for batteries and phone chargers will survive, albeit in a much-reduced form. A bankruptcy judge in Delaware approved a bid from hedge fund Standard General that will keep the troubled electronics retailer from total liquidation, according to a report in the Wall Street Journal. Standard General’s offer for the company, a $160 million mix of cash and debt, will preserve more than 1,700 stores and some 7,500 jobs. About 2,300 stores will close.
Today’s deal brings to a close a contentious auction process that had gone on for more than a week. Rival bidders accused Standard General, which was one of RadioShack’s largest creditors, of using “machinations and manipulation” to ensure its debt-heavy bid was selected; less than $50 million of Standard General’s bid was cash, which drew objections from Salus Point Capital, whose own cash-heavy bid totaled $150 million. “Salus is not prepared to put new dollars into an auction that has been undermined,” Salus counsel Anthony Clark wrote in a letter sent to the judge overseeing the auction.
This was not the first time Standard General has been accused of manipulating its relationship with RadioShack for its own benefit. Earlier this year, the hedge fund was accused of artificially delaying RadioShack’s bankruptcy so it could cash in on a number of derivatives. It was also accused of using its status as a preferred lender to take on RadioShack store leases at prices far below market rate.
The remaining locations will now become co-branded Sprint stores, a fine overlap for the inventory that RadioShack had begun peddling after consumer appetite for its products began drying up. Standard General is also a Sprint creditor.
RadioShack filed for bankruptcy in early February after months of sliding profits had reduced the retailer to a punch line so sad that John Oliver felt compelled to stick up for them on a recent episode of “Last Week Tonight.”