Standard General LP's reduced buyout offer of $145.5 million is RadioShack Corp.’s only hope of surviving bankruptcy and staving off liquidation, The Wall Street Journal reported today. The offer is less than the earlier estimate of $200 million made by the hedge fund because the lead bidder is leaving hundreds of RadioShack stores behind. The deal is the only proposal that could save 9,000 jobs at the retailer. RadioShack won bankruptcy court approval last month to auction about 2,000 of its stores with an initial $200 million bid from Standard General, which would have kept about half of the stores open and operate them under an agreement with Sprint Corp.
A competitive auction over the future of Wet Seal Inc. ended on Thursday with Versa Capital Management LLC agreeing to take over at least 140 of the teen clothing chain's stores and sink an initial $10 million into the company's operations, the Wall Street Journal reported on Saturday. Unlike many troubled retail chains catering to young women, which are liquidating, Wet Seal entered chapter 11 protection Jan. 15 with plans to keep a slimmed-down version of the company operating. The chain closed more than 330 of its stores ahead of its bankruptcy and laid off nearly 3,700 employees. Wet Seal's initial savior was B. Riley Financial Inc., a Los Angeles-based company that agreed to take 80 percent of the equity in a reorganized Wet Seal in exchange for $25 million. But the firm lost out in a bankruptcy auction in favor of an offer from Philadelphia-based private-equity firm Versa. The Versa deal includes $7.5 million in cash slated for unsecured creditors, an agreement to pay so-called cure costs as well as administrative and priority claims, and $10 million in exit financing. Versa also agreed to take over a $20 million bankruptcy financing commitment from B. Riley and pay B. Riley a $625,000 breakup fee.
A skeptical unsecured creditors’ committee in the RadioShack Corp. case issued more than a dozen subpoenas as part of an investigation into whether bankruptcy was necessary for the electronics retailer, now trying to sell its 4,000 stores, Bloomberg News reported on Friday. The committee asked advisors and business partners to provide all documents related to pre-petition loans and credit-default swaps late last year and, if relevant documents were destroyed, to explain why. The Fort Worth-based company sought bankruptcy protection in February citing $1.39 billion of debt.
RadioShack Corp. reiterated its belief that there will be no recovery for any holders of its common stock in its pending bankruptcy proceedings, MarketWatch.com reported today. The failed consumer electronics retailer made its statement in light of the trading volume of its stock, which closed yesterday at 18 cents, on volume of 1.08 million shares. It had closed as high as 21 cents earlier this week. RadioShack said that it believes that the claims of its secured and unsecured creditors will not be fully satisfied, leading to the conclusion that RadioShack common stock has no value, the company said in a statement.
Declining mall traffic has eaten away at the teen retail sector, contributing to the recent bankruptcy filings of once-iconic 90s brands such as dELiA*s, Wet Seal and Deb Shops, Forbes.com reported yesterday. Now, industry analysts have turned their gaze to Aeropostale, as the ailing retailer has experienced eight consecutive quarters of losses and burned through $84 million in cash in the last year. Though it has some runway due to a rescue loan provided by private-equity firm Sycamore Partners last March, it may have to raise additional financing if it continues to sustain losses. U.S. tweens and teens account for approximately $208.7 billion in spending dollars per year, according to data from the 2010 U.S. Census. But a spring 2014 Piper Jaffray survey tracking teen spending patterns observes that food and electronics continue to divert teen dollars away from fashion, with food taking a greater percentage of the teenage wallet than fashion for the first time in the survey’s history.
Women’s dress and formalwear chain Cache officially kicked off going-out-of-business sales on Friday, and customers should act fast if they’re holding on to a gift card for the retailer, the Wall Street Journal reported yesterday. Cache said in a court filing on Friday that it plans to honor gift cards for 30 days, meaning they’ll be valid until April 5. The same goes for merchandise returns (only on clothing bought before the liquidation sales) and other promotions.
Cache, a women’s dress and formal wear retailer, is about to launch going-out-of-business sales at its more than 150 stores nationwide, the Wall Street Journal reported today. The latest in an increasingly long line of troubled women’s retailers to seek chapter 11 protection, Cache started its run through bankruptcy hoping to find a buyer willing to keep some stores alive. That aspiration ultimately failed, though a 25-hour auction did drive up the price of the company’s remaining assets. An attorney for Cache told a judge on Tuesday that the marathon auction, which lasted all day Monday and through the night, is expected to bring in $18 million for creditors. The $16.4 million that Cache still owes Salus Capital Partners will be completely repaid, leaving some money for lower-ranked creditors like vendors and landlords.
The judge overseeing RadioShack Corp's chapter 11 bankruptcy case yesterday approved a revised $1.5 million bonus plan for eight top executives at the electronics retailer, over the objection of the U.S. Trustee in the case, Reuters reported yesterday. Bankruptcy Judge Brendan Shannon said that while he shared some of the trustee's concerns over the key executive incentive plan, he was convinced the executives would be "up to their elbows" with the sale of 2,000 RadioShack stores. Shannon also said he was impressed the plan's payout had been reduced through negotiations. Acting U.S. Trustee Andrew Vara on Saturday filed an objection to the plan, initially set at $2 million. Vara said it would reward the executives for staying put at RadioShack after reaching the stalking-horse bid for the 2,000 stores. The bid was reached before RadioShack filed for bankruptcy in February. RadioShack said that its executives worked to increase the value of the bid by $30 million during negotiations. http://www.reuters.com/article/2015/03/04/radioshack-bankruptcy-bonusplan-idUSL1N0W62N620150304
In related news, RadioShack Corp.'s creditors ironed out the final details of a $285 million bankruptcy loan at a court hearing yesterday amid indications that suppliers, landlords and other unsecured creditors will sustain significant damage in the retailer's chapter 11 proceeding, Dow Jones Daily Bankruptcy Review reported today. The Fort Worth, Texas, company filed for bankruptcy on Feb. 5 after a long losing streak. It is selling off and shutting down about half its 4,000-store chain, but hopes to keep the rest in operation, in the hands of new owners. (Subscription required.) http://bankruptcynews.dowjones.com/Article?an=DJFDBR0120150304eb34p25nb&cid=32135009&ctype=ts
Creditors have come to terms with RadioShack Corp. over bonuses top-ranking insiders stand to earn in the weeks ahead, as the retailer attempts to save a slice of its battered collection of stores, Dow Jones Daily Bankruptcy Review reported today. Jay Indyke, lawyer for the official committee representing suppliers, landlords and others owed upwards of $500 million, said yesterday that the panel has negotiated a resolution with the company over the pay-enhancement request. A bankruptcy judge must sign off on the bonus program, which faces opposition from federal bankruptcy watchdogs. On Saturday, U.S. Trustee Andrew Vara filed papers saying that RadioShack is paying too much for too little in the way of performance from its leaders.
A unit of GameStop Corp., the video-game chain, won an auction for the right to take over more than 160 stores that bankrupt consumer-electronics retailer RadioShack Corp. was planning to close, Bloomberg News reported yesterday. In court documents filed on Wednesday, RadioShack said that GameStop’s Spring Communications Holding Inc. will pay $15,000 a store to take over leases at locations around the U.S. Spring has about two months to decide which of the stores it wants. RadioShack filed for bankruptcy this month with an agreement to sell about half of its 4,000 stores to a unit of Standard General LP, its biggest shareholder. Standard General, in turn, has a co-branding agreement with Sprint Corp.
