Wilmington, Del. – RadioShack’s unsecured creditors want to mount an investigation into whether the company’s actions before the chain’s bankruptcy filing might have unduly benefitted its lenders.
Citing “too many unanswered questions,” a creditors’ committee representing landlords, vendors, bondholders, employees and suppliers, including AT&T and Simon Property Group, has asked the federal bankruptcy court here for copies of documents and access to executives and data files.
The group, which represents over half a billion dollars in unpaid claims, said it is looking to expose possible breaches of fiduciary duty by RadioShack’s board as well as any hidden assets.
Committee lawyers said the CE chain made “puzzling decisions” that benefitted lead lenders Standard General and LiteSpeed Management. Last fall the two hedge funds provided RadioShack with an emergency $120 million lifeline to help it avert bankruptcy and continue operating through the all-important holiday selling season, although the creditors believe that delaying the Chapter 11 filing favored the funds’ investment strategy but added millions in corporate losses.
The retailer ultimately filed for bankruptcy protection on Feb. 5 after posting 11 consecutive quarterly losses, allegedly defaulting on its term loans and burning through its remaining cash.
The chain is currently liquidating about half its 4,100 locations and plans to reopen the remainder later this year as co-branded Sprint and RadioShack stores.