Legal

Bid Values RadioShack Name at $20M

Shareholder Standard General has the lead bid, and a bankruptcy court has approved its use of "credit-bidding" to buy some of RadioShack's stores.
Matthew HellerFebruary 27, 2015
Bid Values RadioShack Name at $20M

Those interested in the assets of RadioShack can now acquire the brand name and other intellectual property without having to buy any stores — but they’ll have to top a $20 million lead bid from the bankrupt electronics retailer’s largest shareholder.

RadioShack lawyers said at a bankruptcy court hearing Wednesday that the company’s name and intellectual property would be sold separately from about 2,000 of its stores and that hedge fund Standard General agreed to an initial bid of at least $20 million. The auction is scheduled for March 23.

Bill Samuels, an intellectual property lawyer at W.R. Samuels Law, said the RadioShack name still has plenty of value despite the financial troubles that forced the company to file bankruptcy earlier this month.

“When somebody says ‘RadioShack,’ you certainly know what they’re talking about,” he told CNN. “People will continue to discuss it, even if it’s a completely different business.”

Standard General has also made an initial bid of $200 million for the stores. It plans to keep about half of those stores open and co-brand them with wireless provider Sprint, CNN reported.

U.S. Bankruptcy Judge Brendan Shannon on Wednesday approved a plan to let Standard General bid for the stores using millions in debt from RadioShack in a process known as credit-bidding. RadioShack simultaneously held an auction for the leases to the 1,100 stores it will close this month, with about 200 leases receiving bids.

“Everybody is moving really fast,” Greg Gordon, a RadioShack lawyer, told CNN. “The company is losing money every day, and every day that goes by is more value that’s lost.”

He said he doesn’t know just how much the RadioShack name will sell for. “Somebody is willing to pay $20 million for it,” he said. “The auction will determine its value.”

Standard General is battling a group of unsecured creditors, meanwhile, in bankruptcy court. In October 2014, Standard General, along with fellow shareholder LiteSpeed, acquired the company’s then outstanding credit agreement loans from GE Capital.

“In seeking court authority to, among other things, investigate the October 2014 transaction to determine whether it is potentially avoidable as a fraudulent conveyance,” said an S&P Capital IQ blog this week, “the unsecured creditors’ committee alleged the deal may have been specifically undertaken, in part, to delay the company’s default and Chapter 11 filing until after the fourth quarter of 2014, in order to protect certain participating investors in the transaction that may have sold [credit default swap] protection on the company betting it would not default before Dec. 20, 2014.”

The S&P Capital IQ blogger, Alan Zimmerman, also said that the unsecured creditors’ committee is alleging that the deal “served to position Standard General at the top of the company’s credit structure to pave the way for its acquisition of certain of the company’s stores (to be followed by a co-branding deal with Sprint in the acquired stores) via a credit bid.”

GameStop has expressed interest in some of the store leases. If the company was awarded those leases, “the locations would be primarily used to expand the retail footprint of our Spring Mobile business, which is an exclusive AT&T dealer,” a GameStop spokesman told Bloomberg.