Judge Approves the Final Bankruptcy Plan of RadioShack

by San Antonio Attorney

When RadioShack filed for bankruptcy early this year, it didn’t come as a surprise to many. Moreover, it’s also not surprising why it has taken eight months to deal with the affairs of a business that was nearly a century old and had about 4,000 stores.  Although a number of its stores were rescued and remained open under a new proprietor, and several creditors will get full payments, the unsecured creditors may not get enough payments.

The electronics store had $1 billion in liabilities, and its assets are not enough to pay back all its creditors.  To resolve all lawsuits filed by junior creditors, the senior creditors agreed to put aside $9 million in a trust for those creditors when the business finally dissolves.

However, the junior creditors are still going after the Radioshack executives for not fulfilling its fiduciary duty with their business decisions in recent years: any money that will be awarded from that will also help lessen their losses.

The RadioShack stores that continue to operate were acquired by Standard General, a hedge fund that financed RadioShack when it was having problems.  They formed a company called General Wireless that would purchase the stores for $26.2 million.

It was not the highest bid for Radioshack, but the court approved it since it protected thousands of jobs.  Salus Capital offered a higher bid, but it would have close down all of RadioShack’s outlets and sell its assets.

A very important thing for consumers, who are somehow treated as creditors in business insolvency if they have gift cards, the Texas state attorney general headed in reaching a settlement to redeem gift cards. An escrow account is also created so consumers won’t need to hang on months or years to retrieve their money.

Debtors are required to create a bankruptcy plan because the law tries to balance the need of debtors for a fresh start with creditors’ interests. To find out if bankruptcy is the right solution for you, consult a Bankruptcy Attorney San Antonio.

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