Dive Brief:
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Next week's auction for what’s left of RadioShack Corp. will be led by hedge fund Standard General LP, which says its offer is the only one that will save some 9,000 jobs at the electronics retailer.
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The hedge fund’s offer is valued at $145.5 million, not enough to cover the retailer’s debts, according to a Thursday court filing. The offer includes a “credit bid” or canceling of debt and is less than what the hedge fund previously offered, reflecting its decision to take on 1,723 stores instead of 2,000.
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The deal is contentious and puts the auction in some doubt as other lenders question Standard General’s approach, preferring to garner more cash to cover more debts. Salus Capital LLC, for example, filed an complaint on Wednesday seeking to limit credit bidding to $111 million.
Dive Insight:
Bankruptcy is a process of shaking out winners and losers, and this battle for RadioShack’s remaining assets is no different. The question for the embattled retailer is whether it will fall to liquidation or, as Standard General says it could, survive in some form.
The retailer faced the extreme headwinds in the electronics sector and its turnaround efforts were consistently stymied by lenders blocking plans to close underperforming stores. If Standard General’s offer prevails, it is a last-ditch effort to maintain at least a shadow of the once-iconic brand.
“We’ve gone from selling a Bentley to selling a Ford to selling a used Vespa,” said Adam Harris, lawyer for RadioShack creditor Cerberus Capital Management.
