RadioShack can begin closing hundreds of stores across the U.S. after receiving approval from a U.S. bankruptcy judge in Delaware on Friday.
The Fort Worth-based retailer, which filed for Chapter 11 bankruptcy protection a day earlier, said it had already begun discounting inventory at some of the stores in October and stopped stocking shelves in December. The company listed more than 1,700 stores that could be closed in three waves, including its concept store in Sundance Square.
RadioShack also laid out an aggressive time frame to execute the sale of up to 2,400 stores to a New York hedge fund, Standard General. The companies have an agreement where Standard General will buy between 1,500 and 2,400 locations and Sprint Corp. will then set up operations inside up to 1,750 stores, which would carry both the Sprint and RadioShack names.
RadioShack asked the court to establish a March 11 deadline for the submission of any additional bids for the locations and for the court to auction off the stores by March 16. It then asked the court to approve the sale to the winning bidder by March 18.
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Prior to filing for bankruptcy on Thursday, RadioShack said, it had identified more than 1,000 stores that were losing money. It asked the court for permission to close up to 2,100 of its 4,000-plus company-owned locations.
“There has been no significant interest on the part of any potential acquirer during the ongoing sale process relating to the purchase of the approximately 2,100 stores contemplated in the Store Closing Sales,” a bankruptcy filing said.
The initial wave of store closures will shut down 162 stores nationwide, none in Tarrant County. However, the second wave has 31 stores in the Metroplex targeted for closure, including several locations in Fort Worth. In all, 143 Texas locations are on the list to possibly be closed.
Clearance sales began at many stores this week, before the bankruptcy filing was made.
“This has been a challenging time for all of us who are loyal to RadioShack,” Chief Executive Joe Magnacca said in a statement on Friday. “We have had a lot of amazing support here in Fort Worth and we appreciate it.”
The Sundance Square location was listed as part of the third wave of potential store closures. When it opened in 2013, RadioShack touted the store as a new concept with contemporary features designed to attract younger consumers. The company did not provide specific timing for the waves of store closings.
“RadioShack has been an institution in Fort Worth for nearly 100 years and we most certainly don’t want to see the company leave our community,” said Johnny Campbell, president and CEO of Sundance Square. “Having a high-profile brand like RadioShack in Sundance Square was a wonderful asset and they were a part of our Commerce Street revitalization. We only have well wishes for all those impacted by this latest development.”
On Friday, the bankruptcy court also approved several other first-day motions to help keep RadioShack operating while it is under bankruptcy protection. The orders will allow the retailer to continue paying employees and honor gift cards purchased by customers during the holiday season.
It is possible that other bidders could emerge for desirable retail locations, said Wayne Barnes, a bankruptcy law professor at Texas A&M University School of Law in Fort Worth. By lining up a buyer, Standard General, for these assets, RadioShack’s “prepackaged” bankruptcy filing may mean the retailer is able to exit bankruptcy protection within three to six months.
“Basically, it’s a way to make the bankruptcy case a much shorter, faster and hopefully much less expensive process,” Barnes said. “But it is not guaranteed that Standard General and Sprint will be the buyer at the end of the auction process.”
Manny Grillo, a partner in the bankruptcy and restructuring practice at Baker Botts, said retailers that have filed for bankruptcy in the past often find themselves in liquidation if they don’t have a restructuring plan in place.
“They had to have some sort of transaction in place to have any chance of surviving bankruptcy,” Grillo said. “The goal was to capture any remaining residual value the RadioShack brand has for some limited time but it will probably be phased out over the long term.”
RadioShack also filed a list of outstanding creditors that was 1,250 pages long. Eight former executives were on a creditors list of the largest unsecured claims, who are owed a total of more than $5.5 million. The claims represent money owed the former employees as part of a supplemental executive retirement plan, or SERP.
Jana Freundlich in Fort Worth, a former vice president for compensation, benefits and human resources systems, is owed $1.3 million, followed by Mark Barfield in Colleyville, a former vice president and treasurer, who is owed $1 million, court filings show. Also on the list is Telvin Jeffries, a former executive vice president who resigned in November, and is owed $383,304 in severance pay.
Star-Telegram reporter Sandra Baker contributed to this report.
Slated to close
Fort Worth: 3107 Greene Ave.; 5736 Camp Bowie Blvd.; 4801 S. Hulen St., No. 128; 6310 Meadowbrook Dr.; Hawks Creek Shopping Center, 550 Alta Mere Dr., Sundance Square, 400 Commerce St.; Eastchase Market, 1540 Eastchase Parkway; 2600 W. 7th St.
Arlington: Sublett Corners Shopping Center, 5912 S. Cooper St., No. 110; 1108 N. Collins, Suite A; The Parks at Arlington, 3811 S. Cooper St., Suite 1014; 901 W. Pioneer Parkway, No. 101; 2131 N. Collins St., Suite 411.
Burleson: 130 NW John Jones Dr., No. 224; Burleson Town Center, 811 Alsbury Blvd., Suite 400;
Benbrook: 93933 U.S. 377 South
Euless: 104 S. Ector Dr.
Hurst: 1332 Precinct Line Road
North Richland Hills: Davis Town Crossing, 8528 Davis Blvd., Suite 180
Mansfield: 900 N. Walnut Creek Dr., Suite 105