RadioShack Went Bankrupt Twice in 25 Months. The Filings Explain Why

In June 2015, RadioShack told the SEC that "there will be no value for common stockholders." Months earlier, 1,743 of its stores had been sold for about $160.7 million, and about $113.0 million of that price was a credit bid: debt that affiliates of the hedge fund Standard General already held. 25 months after the first filing, the company running those stores, in partnership with Sprint, was back in the same Delaware court. This video follows RadioShack through 2 bankruptcies using its own SEC filings, its bankruptcy record and 2 court opinions: profits that turned into a $400.2 million loss, $835 million in loans, a plan to close up to 1,100 stores that needed lender consent, a customer list it had promised never to sell, and a Sprint partnership its own 2017 filing said "did not succeed." This is Case File No. 09. Every factual claim in this video carries its source on screen. The closing section is clearly marked as argument, not reporting. CHAPTERS 0:00 Opening 0:52 CHAPTER 1 — THE BUYBACKS 2:42 CHAPTER 2 — THE LENDERS 5:07 CHAPTER 3 — THE CREDIT BID 7:11 CHAPTER 4 — THE LIST 9:04 CHAPTER 5 — THE PARTNER 11:39 Where the reporting stops and the argument begins SOURCES · RadioShack Corp. Form 10-K, fiscal 2013, and Form 10-K, fiscal 2011 (SEC). · RadioShack Corp. Forms 8-K: May 2014; April 2, 2015; June 10, 2015 (SEC). Press release of December 2, 2014 (SEC Ex. 99.1). · In re RS Legacy Corp. (formerly RadioShack Corp.), Case No. 15-10197 (Bankr. D. Del.) — Joint Disclosure Statement, August 10, 2015; Notice of Agreement with state attorneys general, May 20, 2015. · Federal Trade Commission — letter of Jessica Rich, Bureau of Consumer Protection, May 18, 2015. · Opinion, Salus Capital Partners, LLC v. Standard Wireless Inc. et al., Adv. No. 15-50239 (Bankr. D. Del.), May 11, 2016. · In re General Wireless Operations Inc., Case No. 17-10506 (Bankr. D. Del.), filed March 8, 2017; first-day declaration as quoted by Cole Schotz. · Opinion and Order, Official Committee of Unsecured Creditors v. Sprint Solutions, Inc., Adv. No. 17-50871 (Bankr. D. Del.), December 1, 2017. · Dallas Morning News, February 3, 2015 (buyback and dividend totals, as reported); Fortune (February 5, 2015; March 2017; June 30, 2017); NPR (February 5, 2015; March 9, 2017); CNBC (December 12, 2014); Forbes (December 2, 2014); Retail TouchPoints (March 2017); Retail Dive (2017, January 2018, 2023); ARRL (March 2017); Associated Press (February 5, 2015). · Ed Fox, SMU, in the Dallas Morning News — an academic's opinion. THE OTHER SIDE · Most share buybacks came while RadioShack was profitable, and the company suspended them on January 30, 2012, 3 years before the first filing. · The company's own filing pointed to wireless carriers' competing stores, tighter vendor credit and the 2014 holiday season. · Lenders are entitled to negotiate the terms of their consent. Salus alleged a covenant breach in 2014; RadioShack called that claim "wrong and self-serving," and a derivatives committee found no breach, as CNBC reported. The "$35 million in fees" figure is RadioShack's own claim. · Standard General's affiliates added about $140 million of liquidity in 2014, and the 2015 sale kept 1,743 stores open. Credit bidding is a standard, court-approved bankruptcy tool. · Sprint said it would defend the creditors' committee's suit "vigorously," and said the 2017 closings were "not material" to its overall sales results. LEGAL NOTICE — This video does not accuse RadioShack's management, Standard General, Salus Capital Partners, Sprint, or anyone else of wrongdoing. Salus's lawsuit was dismissed in 2016 for failure to state a claim; that was a ruling on the pleading, not a finding about anyone's conduct. The creditors' committee's claims against Sprint are allegations, which Sprint denied; the bankruptcy court ruled only on where the case would be heard, and we found no public ruling on the merits and no reported settlement. Figures marked "as reported" come from the outlets named. The closing section is identified on screen as argument rather than reporting. This channel is not affiliated with, endorsed by, or connected to RadioShack, RS Legacy Corp., General Wireless, Standard General, Salus Capital Partners, Sprint, Retail Ecommerce Ventures, Unicomer Group, or any other company or person discussed. All images are original illustrations; no company logo, mascot, or trademark appears in this video. Commentary and analysis.