RadioShack Corporation (OTCMKTS:RSHCQ) Files For Bankruptcy Despite Asset Purchase Agreement

RadioShack Corporation (OTCMKTS:RSHCQ) recently filed for bankruptcy, except for its Asia operations and stores operated by Mexican subsidiary. Alongside, the struggling retailers also announced a deal with Standard General to sell around 1,500 to 2,400 stores. RadioShack has also secured a $285 million DIP (debtor-in-possession) financing to provide it with liquidity during the sale process.

The bankruptcy filing ends RadioShack’s struggle to survive its electronics business and an end of 94 years long era of once popular electronics retail footprint. In early internet age, the company succeeded to withstand the rise of Apple and transition to wireless devices by selling accessories like battery packs, cords, adapters and other technological parts.

RadioShack Corporation (OTCMKTS:RSHCQ) was founded by Theodore and Milton Deutschmann in Boston, which scored success with the mass adoption of the radio. The retailer started selling its first mobile phone in 1984 and also became a top seller for a list of electronics including Walkman, CD Players, beepers and mini disk players but failed to sustain with rise of smartphone.

Ultimately, changing consumer habits with rapid evolution of communication technology proved too much to overcome for nine decades old retailer. The company filed for bankruptcy in a Delaware court with $1.38 billion in liabilities and $1.2 billion in assets.

Alongside the Chapter 11 filing, a private equity fund Standard General announced to sign a pact to acquire up to 2,400 RadioShack stores via General Wireless, the entity formed for this purpose. Standard General will work with Sprint to create dedicated mobility “store-within-a store” arrangement at 1,750 locations. The agreement was still subject to negotiation and regulatory approval.

Currently, RadioShack Corporation (OTCMKTS:RSHCQ) has 4,000 company owned stores in the United States and more than 1,000 dealer franchise store overseas.

In early trading, the stock is 1% up from its previous close.

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