Judge Okays RadioShack Sale to Standard General

WILMINGTON, DE—RadioShack Corp.'s plan to sell its remaining 1,743 stores to its largest shareholder won approval here Tuesday from the federal judge presiding over the electronics retailer's bankruptcy case. Standard General LP, which was declared the winner in an auction of the stores this past Thursday, plans to cobrand most of the stores with wireless provider Sprint Corp.

The approval from Judge Brendan Shannon at US Bankruptcy Court in Delaware followed four days of hearings pitting Standard General against Salus Capital Partners, RadioShack's biggest creditor, which claimed its $271-million all-cash offer was superior. According to published reports, Shannon said Tuesday that he had to weight two alternative scenarios for RadioShack: liquidation via the Salus proposal or a sale as a going concern.

“The going-concern bid from Standard General is clearly economically superior to the liquidation bid even before taking into account the added and terribly important benefit of preserving over 7,000 jobs and saving a century-old American retailing icon,” said Shannon. Borders, Loehmann's Inc. and other large retailers that filed for bankruptcy protection in recent years ended up liquidating

Established in 1921, Fort Worth-based RadioShack culminated a long decline, including years of quarterly losses, with its Feb. 5 bankruptcy filing. It entered bankruptcy court with approximately 4,000 locations; about 2,000 either have closed or have been slated to close.

Handling the store liquidations is a group including Hilco Merchant Resources, Gordon Brothers Retail Partners LLC and Tiger Capital Group LLC. Additionally, DJM Real Estate, a Gordon Brothers division, is managing the sale of seven RadioShack-owned distribution centers, which may be purchased individually or in any combination, subject to court approval.

Under the Standard General plan, Sprint will occupy about one-third of the space in a store-within-a-store format at each retail location it's co-branding. Sprint employees will sell mobile devices and plans on all Sprint brands, including Boost and Virgin Mobile, and Sprint will be the primary brand on storefronts and in marketing materials for these locations, which would more than double the wireless company's current store count.

In late February, video game retailer GameStop won an auction for 163 RadioShack leases, which it will use to expand its Spring Mobile wireless chain. GameStop hasn't decided yet which RadioShack leases it will assume; the sale will expand Spring Mobile's retail footprint by about 50%.