|The former RadioShack Corp. is currently nearing the final stretches of its bankruptcy filing, reaching a final reckoning after being in business for 94 years.
According to the Wall Street Journal, bankruptcy lawyers are currently counting the take from the liquidation of the now-collapsed company. At the same time, Salus Capital Partners LLC is seeking to oust these lawyers and replace them with a trustee by converting RadioShack’s bankruptcy into a Chapter 7 filing.
The electronics retailer, which made a name for itself over the last century by selling consumer electronics ranging from cellphones to radios, filed Chapter 11 bankruptcy in February. The company hastily closed or sold its 4,000 or so remaining store locations. This form of bankruptcy, which offers legal protection from creditors and sets up a division of assets, is most often filed by businesses. In 2013, about 8,980 businesses filed Chapter 11 bankruptcy.
By converting RadioShack’s bankruptcy into a shoestring Chapter 7 case, Salus Capital would effectively replace the company’s teams of lawyers and advisers with a single trustee. Salus Capital, a hedge-fund owed some $150 million, said in a June 23 filing that RadioShack’s liquidation brought in much less than it should have.
Additionally, the bankruptcy case has racked up $45 million in legal and other professional fees, court papers said, which “threaten to rapidly erode creditor recoveries in these cases.” By switching to a trustee, Salus would no longer need to front the bill for these legal fees, and the case would be wrapped up in a much more efficient manner.
“Salus stands to lose the most in these Chapter 11 cases, which at this stage are essentially being funded directly from Salus’s pockets,” lawyers for the hedge fund explained.
If nothing else, it’s clear that the cord is finally cut on RadioShack’s future.