RadioShack Rescue Deal Clears Bankruptcy Court

By Peg Brickley 

RadioShack won court approval of a lender takeover that will send the retailing operation out of bankruptcy trimmed-down, but still selling electronics.

Tuesday's decision from Judge Brendan Shannon clears the way for Standard General to save 1,743 stores and 7,500 jobs in a streamlined relaunch of the business.

Overtaken by newer retailers, the one-time electronics pioneer was weighed down with some 4,000 outlets and too much debt when it filed for Chapter 11 bankruptcy.

Standard General intends to operate most of the salvaged stores in an alliance with Sprint Corp. The arrangement is designed to draw mobile-phone shoppers to the electronics goods outlets without dragging on RadioShack's profits.

The ruling came hours before a deadline that could have tipped the sprawling chain into an all-out liquidation. RadioShack filed for bankruptcy protection Feb. 5, and immediately launched going-out-of-business sales at nearly 2,000 stores.

The plan was to try to save the rest, through a sale to lender Standard General LP, a hedge fund that took an interest in RadioShack last year. March 31 was a crucial date, as RadioShack didn't have the spare cash to cover April rent.

Valued at about $160 million, Standard General's offer was the best bid to come out of an auction last week where the new owner competed with liquidators and with Salus Capital Partners, another lender.

Write to Peg Brickley at [e-mail]

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