RadioShack’s Successor Preparing to File for Bankruptcy, Sources Say
(Editor’s Note: This story first appeared on Bloomberg.Com)by Lauren Coleman-Lochner, Jodi Xu Klein, and Scott Moritz
General Wireless Operations, the RadioShack successor created by a partnership between Sprint Corp. and the defunct retailer’s owners, is preparing to file for bankruptcy, according to people familiar with the matter.
A filing could happen within the coming days and will probably result in liquidation, said the people, who asked not to be identified because the process isn’t public. The beleaguered company, which does business as RadioShack, operates outlets that share space with Sprint’s retail locations, as well as franchising the name to other stores.
The bankruptcy would deal another blow to the RadioShack brand, an almost-century-old source of electronics that struggled to competewith online merchants and big-box retailers. The General Wireless venture was designed to help the RadioShack name live on following the demise of the original chain. But pressures on the business, including sluggish foot traffic at shopping centers and a shift to e-commerce, have persisted.
RadioShack Corp. filed for bankruptcy in 2015. The company closed about half of its 4,000 stores and sold 1,700 to creditor Standard General LP, which teamed up with Sprint to form General Wireless. The deal created 1,400 co-branded locations with Sprint, plus several hundred franchised units.
Sprint, the fourth-largest U.S. wireless carrier, declined to comment. Standard General, an investment firm that previously backed American Apparel, didn’t have an immediate comment.
When the venture was rolled out in 2015, Chief Executive Officer Ron Garriques said he had “ambitious plans for the new RadioShack.” The business renovated locations and updated inventory. The Sprint partnership also was meant to give the stores an edge.
At the time, the business lined up a financing package that included a $50 million asset-backed credit line, led by RBC Capital Markets, as well as a $25 million term loan from Great American Capital Partners.
But the company has been working against a broader pullback in brick-and-mortar retail. Best Buy Co., the largest electronics chain, delivered a disappointing outlook this week, a sign that even the biggest retailers are struggling to adapt.