Salus Capital Partners LLC is pressing ahead with a bid to convert RadioShack Corp.'s chapter 11 case into a shoestring chapter 7 that would oust teams of lawyers and advisers and replace them with a trustee, Dow Jones Newswires reported yesterday. Salus, a hedge-fund owed $150 million, said in court papers on Monday that the liquidation of the ailing electronics retailer brought in far less than it should have and that legal and other professional fees are running higher than expected: $45 million by the end of June, according to court papers. The mounting legal fees "threaten to rapidly erode creditor recoveries in these cases," lawyers for the hedge fund said in court papers. "Salus stands to lose the most in these chapter 11 cases, which at this stage are essentially being funded directly from Salus's pockets." RadioShack's lawyers are trying to fend off Salus's efforts to convert the case. If Salus's motion wins a judge's signature at a hearing currently scheduled for Thursday, RadioShack's lawyers and other advisers would be displaced by a chapter 7 trustee. RadioShack says that Salus benefited from the higher prices professionals were able to get for the company's assets and, in court papers, called the motion to convert the case a "drastic remedy."
