You may know the 94-year-old electronics chain as a place to purchase cellphones, unique radio-controlled and digital toys and MP3 accessories among other items. Now, the company has filed for bankruptcy protection after it entered a deal with the wireless service provider, Sprint, along with a hedge fund of its biggest shareholder. The store itself may continue to be represented thanks to the hedge fund Standard General and Sprint; the two have agreed to buy up to 2,400 of the company’s 4,000 company-owned stores.
Despite being at the height of the technological revolution at its start, RadioShack has not held up in recent years. The rise of e-commerce has reduced the stores’ foot traffic, and cellphone sales have fallen, leading to difficulties for the company. The company reported 11 consecutive quarters of losses. The company did bring on new management to try to pull out of the financial crisis, but the biggest problem was reported as the store’s irrelevance to younger people.
All the remaining stores will be closed, the report states, but until then, the company’s stores will stay open throughout the Chapter 11 process. It’s suspected that the store could survive with fewer stores; the company has $1.2 billion in assets and close to $1.4 billion in debt to account for.
Source: DealBook, “RadioShack Files for Chapter 11 Bankruptcy After a Deal With Sprint” Rebecca R. Ruiz, Michael J. De La Merced, Feb. 05, 2015