RadioShack Files for Chapter 11 Bankruptcy, Will Close up to 2,400 Stores
It's the end of an era for a storied U.S. electronics retailer. RadioShack has filed for Chapter 11 bankruptcy and signed a deal to sell between 1,500 and 2,400 of its approximately 4,000 stores nationwide to General Wireless Inc., an affiliate of hedge fund Standard General L.P. All remaining stores will be closed for good.
As part of the purchase deal, the stores purchased by General Wireless will be cobranded as Sprint wireless outlets, described in a RadioShack press release as a dedicated mobility "store within a store."
"These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders," RadioShack CEO Joe Magnacca said in a statement.
RadioShack's roughly 1,000 franchise operators located in 25 countries, along with its operations in Asia and Mexico, are not affected by the deal.
Observers note that these steps were most likely taken to avoid an all-out liquidation of RadioShack, like those of now defunct retailers Borders and Circuit City. In each of those cases, all stores were closed and all assets were sold to pay creditors.
RadioShack has been part of the U.S. retail landscape since its founding in 1921. It has undergone several strategic overhauls designed to make it competitive, at various times focusing on the sale of mobile phones, toys and household electronics. It has also gone through a series of CEOs in a short time; Magnacca is RadioShack's seventh CEO in just nine years.
A list of the RadioShack stores slated for closure will be posted in the near future on the restructuring information section of the company's website. Stores that are closing are expected to sell remaining inventory.