RadioShack warns its business is like a ‘melting ice cube’

Bankrupt consumer electronics chain RadioShack pushed back against a creditor panel’s criticism of its proposed auction procedures for up to 2,400 stores, saying a drawn-out sales process could diminish the value of the assets and hurt recoveries.

“Although the committee closes its eyes to it, the debtors’ estate is in fact a ‘melting ice cube’ that is losing value on a daily basis,” the Fort Worth-based company said in a Bankruptcy Court filing.

RadioShack, with about 4,000 locations, sought Chapter 11 protection from creditors Feb. 5, with an agreement to sell 1,500 to 2,400 locations to a unit of hedge fund Standard General, its biggest shareholder. Some of those stores would operate under a co-branding deal with Sprint, the wireless carrier.

The proposed sale procedures permit Standard General to use its $250 million secured claim as currency at an auction in lieu of cash, known as credit bidding. The official creditors’ committee filed objections last week, saying credit bidding will chill the sale process and likening the company’s slow path to bankruptcy over the past year to “assisted suicide.”

A hearing for approval of the bid procedures is scheduled for Wednesday in Wilmington, Del.

Standard General also jumped to defend the auction procedures, calling the creditors’ criticism a “litany of innuendo and irrelevant detail.”

Without the hedge fund’s participation, even the best RadioShack locations would have to be liquidated at a cost of thousands of jobs and “significant value to creditors,” Standard General said, adding that it’s devoting “substantial” time and money to building a viable business with Sprint.

To address an objection by the U.S. trustee, the Justice Department’s bankruptcy watchdog, RadioShack amended the proposed bidding procedures to include the appointment of a privacy ombudsman to protect customers’ personal information, according to court papers.

This story was originally published February 24, 2015 at 11:35 AM with the headline "RadioShack warns its business is like a ‘melting ice cube’."