Fort Worth, Texas — RadioShack has declared its stock essentially valueless.
In response to trading volume in its common stock at prices above 20 cents a share, the bankrupt retailer issued a statement warning new investors that they’re throwing good money after bad.
In the press release, RadioShack reiterated its belief that “there will be no recovery for any equity holder” in its pending Chapter 11 proceedings.
Equity holders of a company in Chapter 11 bankruptcy generally receive value only if all claims of a company’s secured and unsecured creditors are fully satisfied, RadioShack explained.
But the CE chain believes that the claims of its secured and unsecured creditors will not be fully satisfied, “leading to the conclusion that RadioShack common stock has no value.”
The company’s largest unsecured creditors include Sprint, a would-be post-bankruptcy partner, owed $6 million; Assurant, owed $4.1 million; Verizon Wireless, owed $2.9 million; Federal Express, owed $1.5 million; and MagicJack, owed $1.3 million.
The iconic retailer filed for Chapter 11 bankruptcy protection last month following years of sales and earnings declines. The case is currently wending its way through a federal court in Delaware amid fire sales, store closures and auctions.