Radio Shack ‘rescuer’ files bankruptcy, likely to liquidate

The company that set out to revive the fortunes of RadioShack, the venerable consumer-electronics chain, filed for bankruptcy after failing to keep up with changing consumer habits.

The company, formed by  Sprint Corp. and former RadioShack owners and known as General Wireless, filed for Chapter 11 protection Wednesday in U.S. Bankruptcy court in Delaware.

The business was contrived to help the RadioShack name live on following the original chain’s 2015 bankruptcy filing. It operates Sprint stores within RadioShack locations, as well as franchising the name to other stores.

When RadioShack Corp. entered Chapter 11 two years ago, it closed about half of its 4,000 stores and sold 1,700 to creditor Standard General LP, which teamed up with Sprint to form General Wireless. The deal created 1,400 mini-stores plus several hundred franchised units.

The company said Wednesday that it will close about 200 stores immediately and evaluate options on the remaining 1,300. Sprint said separately that it would convert “several hundred” RadioShack locations into corporate-owned Sprint stores.

RadioShack operated about 45 stores in Indiana before its bankruptcy, including about 25 in central Indiana. A store locator listed on its web site now lists four outlets in Indianapolis and four others in surrounding communities. 

Pressures on the business, including sluggish foot traffic at shopping centers and a shift to e-commerce, persisted after the previous bankruptcy. The latest filing will probably result in liquidation, people familiar with the matter said March 2. The sources asked not to be identified because the process wasn’t public.

In its bankruptcy filing, General Wireless listed assets and liabilities in the range of $100 million to $500 million each.

Investment firm Standard General backed the first bankruptcy of American Apparel, which filed again for bankruptcy within two years. The clothing chain’s assets were sold to Gildan Activewear Inc. this year and its retail business is being wound down.

The 2015 RadioShack revival set out to renovate locations and update inventory. The Sprint partnership also was meant to give the stores an edge. At the time, the business lined up a financing package that included a $50 million asset-backed credit line, led by RBC Capital Markets, as well as a $25 million term loan from Great American Capital Partners.

The attempted revival was taking pace during a broader pullback in brick-and-mortar commerce. Best Buy Co., the largest electronics chain, delivered a disappointing outlook at the beginning of March, a sign that even the biggest retailers are struggling to adapt. Smaller rival HHGregg Inc. filed for bankruptcy Monday, days after announcing plans to close 88 stores.

RadioShack was founded in 1921 and once had as many as 7,000 stores.

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