Standard General LP will be opening bidder at RadioShack Corporation (OTCMKTS:RSHCQ) bankruptcy auction. It won the role of the lead bidder after offering concessions to creditors. There will be more than 1,700 stores on the block, as the company tries to save a part of its struggling business. The rules for the bankruptcy auction are approved by Judge Brendan Shannon. The auction will take place on March 23 as a part of a turnaround effort.
Standard General is a big shareholder as well as lender of RadioShack. The hedge fund has mentioned that it would run cobranded stores with Sprint Corp (NYSE:S). These stores will be operated within stores. It will commence the reorganized business that will benefit from the customers of Smartphone services. There will be no negative impact on profits that can hurt company’s business. Apart from its offer on inventory and stores, the hedge fund has also offered $20 million to get the rights to the RadioShack name.
The bankruptcy option was announced on Wednesday. The announcement included offer to acquire the brand that wiped out one doubt of the investors over Standard General’s buyout proposal. The creditors were dubious of the bid as they believed that Standard General will keep the RadioShack’s business in operation but would be reluctant to buy the trademarks and name.
The legal approval
Judge Shannon heard the case in the U.S. Bankruptcy Court and said that he would likely support $285 million of bankruptcy financing for RadioShack. It will be possible only when the amount of the loan will decline. Judge said that the problem is costs associated with bankruptcy financing. He sent attorneys for the lenders so that they can consult their hedge fund customers and discuss on a price reduction. If that happens, the probability of financing will rise. RadioShack will receive almost $35 million of funds from the financing.