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Hedge fund Standard General LP will lead the bidding at a bankruptcy auction of 1,700 or more RadioShack stores, as the electronics retailer tries to save some of its struggling business, the Wall Street Journal reported today. Bankruptcy Judge Brendan Shannon yesterday approved rules for a March 23 competition over the part of RadioShack’s business that has been marked for a turnaround effort, roughly half the 4,000-store chain. Standard General won the role of opening bidder after making concessions to creditors. A big lender and big shareholder of RadioShack, Standard General has said it would operate co-branded stores-within-a-store with Sprint. That will ensure the reorganized business will get the benefit of traffic from customers of cellphone services, without the drag on profits that hurt RadioShack’s business, Standard General says. 

Bankrupt consumer-electronics chain RadioShack Corp. pushed back against a creditor panel’s criticisms of its proposed auction procedures, saying that a drawn-out sales process could diminish the value of the assets and hurt recoveries, Bloomberg News reported yesterday. RadioShack, with about 4,000 locations, sought protection from creditors Feb. 5, with an agreement to sell 1,500 to 2,400 of its locations to a unit of hedge fund Standard General LP, its biggest shareholder. Some of those stores would be operated under a co-branding deal with Sprint Corp., the wireless carrier. The proposed sale procedures permit Standard General to credit bid its $250 million secured claim as currency at an auction in lieu of cash. The official creditors’ committee filed objections last week saying that credit bidding will chill the sale process. Standard General also defended the auction procedures, calling the creditor criticisms a “litany of innuendo and irrelevant detail.”

Hawaii’s Hilo Hattie stores have filed for bankruptcy with the hope of surviving as one of the island’s popular spots for tourists to buy travel trinkets and souvenirs, the Wall Street Journal reported today. The struggling chain, which recently closed three of its seven stores, filed for bankruptcy protection on Thursday with $2.2 million worth of inventory. In documents filed in U.S. Bankruptcy Court in Honolulu, Chief Operating Officer Mark Storfer blamed the company’s problems on slow sales. In the company’s most recent fiscal year, it sold about $15.6 million worth of products — down from $23.6 million the year before. The retailer has begun to face collection and eviction actions “against which the [company] does not have a viable defense,” Storfer said.

Bankrupt electronics retailer RadioShack received court approval on Friday for its plan to try to sell the leases to more than 1,100 stores that it will close by the end of February, Reuters reported. RadioShack first proposed closing many of the locations early last year as it struggled to turn around its money-losing operations, but lenders demanded the stores remain open. After filing for chapter 11 bankruptcy earlier this month, RadioShack moved quickly to abandon the stores to avoid paying March rent. Bankruptcy Judge Brendan Shannon gave his approval to the bidding and auction process for the leases, which has been under way for weeks. The company will seek court approval today for the auction process for up to 2,400 stores. An affiliate of the hedge fund Standard General has agreed to act as the stalking-horse bidder for those locations, which will remain open.

After his Standard General LP became the retailer’s largest shareholder last year with a 9.9 percent stake, Soohyung Kim repeatedly pressed RadioShack’s leadership to give up on the business of selling phones attached to long-term service agreements, the Wall Street Journal reported today. The business, he argued, was by far the biggest reason the company wasn’t profitable. Now, the New York hedge fund is putting its money where its mouth is, seeking to lead the purchase of about half the company’s stores out of bankruptcy protection and refocus them on the cables and gadgets that were once a staple of the Fort Worth, Texas-based chain. Sprint Corp. would manage phone sales in a “store-within-a-store” setup. The fund has discussed contributing about $75 million toward a $200 million bid for the new RadioShack, a person familiar with the matter said, a deal that would essentially trade a rescue loan it contributed to and arranged for the retailer last year for an ownership stake. But some analysts give the revamped retailer long odds of success.

Frederick’s of Hollywood has hired liquidators to help close at least a third of its 93 stores as the lingerie retailer works to turn itself around, the Wall Street Journal reported today. Bill Soncini, the company’s chief operating officer, said Great American Group is handling going-out-of-business sales at 31 of the chain’s locations and the number could rise slightly. The Los Angeles-based company, which carries racier lingerie than more mainstream brands like Victoria’s Secret, has stores in 27 states, including California, Florida, Texas and New York. One location slated to close is Frederick’s flagship store in Hollywood, which will shut down by the end of April, Soncini said.

Billionaire Eddie Lampert’s quest to revive Sears Holdings Corp. is looking dubious to credit-swaps traders, Bloomberg News reported today. It now costs more to insure against a Sears default for a year than for five years, a dynamic that indicates traders anticipate a credit event such as a default in the near term. The relationship was reversed as recently as last month, according to prices compiled by CMA in the privately negotiated market for credit swaps. The 129-year-old company, which has lost $7 billion over the past four years, is trying to avoid the fate of RadioShack Corp., another once-iconic retailer that filed for bankruptcy protection this month. Sears has divested assets and received cash infusions from Lampert, one of its largest shareholders. In November, the Hoffman Estates, Ill.-based company said it was considering the sale and leaseback of as many as 300 stores as part of its turnaround effort.

Saladworks LLC, which calls itself the largest U.S. franchised fresh salad chain, filed for bankruptcy yesterday to fend off litigation by Commerce Bancorp Inc. founder Vernon Hill II, its minority shareholder, Reuters reported yesterday. Hill's litigation has made it impossible for Saladworks to find a buyer, restructure or sell additional franchises, the Conshohocken, Pa.-based company said in a bankruptcy court filing. Saladworks said that it hired the investment bank SSG Advisors LLC to look for a buyer, and that an entity controlled by Hill is its largest unsecured creditor. Created in 1986, Saladworks said it has more than 100 locations, and that all will remain open.

RadioShack Corp.’s unsecured creditors say that the retailer should have left a suicide note instead of a trail of unanswered questions about opportunities missed to save the business, the Wall Street Journal reported today. With more than 1,700 stores already being liquidated, the rest of the iconic retailer is headed toward the bankruptcy auction block. It’s a process that unsecured creditors say might have worked last year as part of a measured turnaround effort. Instead, they say, hedge funds engineered a bankruptcy crash landing designed to favor RadioShack’s top-ranking lenders, including the big shareholder that is poised to buy some of the company at a fast auction, Standard General LP.