Radio Shack filed for Chapter 11 bankruptcy protection on February 5, 2015. This corporate bankruptcy filing took no one by surprise, except perhaps how long it took to pull the trigger on filing for relief. It is no secret that the company has been in financial trouble for some time, reporting eleven consecutive quarterly loses according to Reuters, after failing to become the “go to” provider for mobile phones. The rebranding of the chain as the mecca of mobile phone hardware and wireless plans was the latest in Radio Shacks ongoing and ever more desperate efforts to regain a solid foothold. I was surprised to learn this company is 92 years old, having been started in 1921 by two brothers who set out to sell electronic equipment to “radio officers aboard ships” and ham radio operators. It became the quintessential electronic gizmo store in our neighborhoods and prospered during the years it fulfilled this role. It appears the downward spiral began in the 1990s when Radio Shack failed to keep up in the personal computer market and moved solidly away from serving the needs of the “Maker movement” which might have been its salvation.
Radio Shack’s Chapter 11 filing is in the nature of a “liquidation” proceeding as opposed to a true reorganization. The Chapter 11 plan proposes to close half of its stores and sell the other half in an upcoming auction where it is anticipated wireless provider, Sprint Corp., will be an interested bidder. One of the “first day motions” that will be considered by the bankruptcy court is Radio Shack’s motion to pay approximately $3 million in bonuses to remaining employees and management.
If you are considering a filing for bankruptcy relief and wish to consult with a qualified bankruptcy attorney about your options, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation.