Once upon a time, 94-year-old RadioShack was the go-to store for new technology. But Thursday it announced it was filing for protection under Chapter 11 of the U.S. Bankruptcy Code and had reached an agreement to sell as many as 2,400 of its locations to a unit of the hedge fund Standard General L.P. In turn, the hedge fund’s General Wireless Inc. would partner with the Sprint Corp. to operate as many as 1,750 of the outlets, as the Wall Street Journal reported.
With about 24,000 employees last year, RadioShack warned in a filing with the U.S. Securities and Exchange Commission in December that it would have to file for bankruptcy protection unless its fortunes turned around, and quickly. Standard General developed a rescue plan that helped the ailing retailer in October, but it continued to lose money. According to the Journal, RadioShack executives attempted to convince suppliers and lenders to renegotiate agreements, without success. Although the company tried to close 1,100 stores, lenders prevented it, citing a provision in loan documents that limited the retailer to 200 closings a year.
RadioShack is requesting the U.S. Bankruptcy Court in Wilmington, Delaware, to approve a plan that would have Hilco Merchant Resources, a liquidation company, close its remaining stores. It has about 4,000 stores in the U.S., but domestic and international franchise stores aren’t part of its restructuring.
In its bankruptcy petition, RadioShack listed assets totaling about $1.2 billion and liabilities totaling about $1.4 billion, the Wall Street Journal reported. Its deal with Standard General could be set aside should it get higher bids in an auction process that will be court-supervised, the Journal said.