Bankrupt RadioShack Corp. spent an emergency loan on fees and other payments to favored lenders in what creditors said was a departure from a judge’s orders, Bloomberg News reported yesterday. The judge overseeing the bankruptcy approved RadioShack’s borrowing of $10 million on Feb. 10 to allow it to make essential payments. Instead, the company’s budget shows that it used $3.2 million for interest and fees to select lenders and almost $8.7 million for fees and retainers to advisers, a committee of creditors said in a court filing yesterday. The electronics retailer also intends to make unauthorized payments this month of around $38.4 million to lenders who agreed to advance money solely to pay their earlier loans, the committee said. RadioShack has been met with harsh criticism of its borrowing plan and a deal to sell its best stores to its biggest shareholder, Standard General LP, which arranged a large pre-bankruptcy loan. The creditors’ committee has now asked the judge to rewrite his temporary approval to clarify what he was authorizing.
