RadioShack Corporation (OTCMKTS:RSHCQ)’s creditors said that bankruptcy of retailer favored top-ranking lenders. No efforts were made to save the company. They said that the retailer should have written a suicide letter in place of explanations of the company’s failed efforts to save the business. They have demanded a probe on the bankruptcy matter.
With over 1,700 stores being liquidated, RadioShack is moving towards the bankruptcy auction block. It is a measure that unsecured creditors believe should have been taken to save RadioShack Corporation (OTCMKTS:RSHCQ) last year. It could have worked well as a part of a turnaround effort in 2014.However, hedge funds planned a bankruptcy designed to favor top-ranking lenders of the company. It includes big shareholders like Standard General LP, who are prepared to purchase some of the company at a fast auction. To stop auction, the unsecured creditors have filed a case in the U.S. Bankruptcy Court in Wilmington.
Call for investigation
RadioShack’s landlords, unsecured bondholders, and suppliers, are demanding rights to investigate the decisions that caused company to take high level of debt. It kept underperforming outlets functional instead of closing them. The probe can result in a legal action if creditors find that RadioShack Corporation (OTCMKTS:RSHCQ) suffered due to hedge funds plans. If unsecured creditors failed to find evidence, they would only get the amount what will be left after senior creditors’ closes settlement.
RadioShack Corporation (OTCMKTS:RSHCQ) was in deep financial problem in 2013. It had enormous debt that could be reduced if it had liquidated half of its stores. However, senior lenders were against liquidation decision. As per the papers filed, instead of giving advice to put company into Chapter 11 protection in 2014, big shareholders including Standard General bought RadioShack’s top-ranking debt and allegedly followed a self-serving strategy. These shareholders sought the help of hedge funds that wanted to avoid huge losses on credit default swaps lined to the company’s debt.