RadioShack’s creditors committee has secured court backing for a settlement with senior lenders that removes a potential impediment to approval of the company’s bankruptcy plan at a confirmation hearing next week, Bloomberg News reported yesterday. Separately, a hearing on a demand by Texas Attorney General Ken Paxton that holders of gift cards receive information from the court was rescheduled for Aug. 26, the date of the confirmation hearing. When RadioShack sold assets this year, including more than 1,700 stores to the Standard General hedge fund, senior lenders got $12 million from the proceeds. The money was put into escrow accounts for paying expenses and settlements of lawsuits in which the senior lenders have indemnification from RadioShack, which changed its name to RS Legacy Corp. after the sale. The unsecured creditors’ committee threatened to sue, claiming defects in the senior lenders’ lien package. By settling, lenders agreed to collect only from the escrow account in compensation for indemnification claims, in return for the unsecured creditors’ agreement not to sue.
