Updated! New York — RadioShack’s lead lender Standard General was the apparent winner of yesterday’s bankruptcy auction, but the sale process will reportedly continue today as unsecured creditors consider suing the hedge fund in an effort to recover an estimated half-billion dollars in debt.
According to sources cited by the Wall Street Journal, the stalking horse bid by Standard General is at least $20 million higher than a potential counterbid from a joint venture of liquidators.
But the auction, held here at the offices of RadioShack’s law firm Jones Day, went late into the night and will continue today as the parties try to hammer out a deal.
The creditors, who stand to recoup little from a sale to Standard General, are using the threat of legal action as leverage. Their contention: that the hedge fund’s use of debt forgiveness to pay for the purchase is improper.
For its part, Standard General said the sale, and a co-branding deal with Sprint, is the only hope of saving RadioShack from total liquidation, but is contingent upon the loan cancellations to fund it.
RadioShack is highly motivated to close the deal before March 31 to avoid another month of rent payments, the Journal reported, while the unsecured creditors have until mid-April to challenge the loans.
Another point of contention is RadioShack’s customer database of over 65 million customer names and address files and 13 million email addresses. At least three states attorney general, for Texas, Tennessee and New York, are trying to block the sale of the personal information, citing the retailer’s public promise to keep it private.
AT&T is also looking to protect proprietary information that includes details of its 10-year-long agreement with chain, the Dallas Morning News said.
According Hilco Streambank, which is assisting RadioShack in the bankruptcy auction, other assets up for grabs include:
* RadioShack's intellectual property, including its trademark, private-label brands, e-commerce platform and domain names;
* a patent portfolio with 73 active and pending applications;
* its franchise and dealer “relationships”;
* its Mexican operations, and;
* its Asian sourcing infrastructure.
The federal bankruptcy court in Delaware is expected to either approve or reject the asset sale on Thursday.
In the meantime, the fate of the iconic, 94-year-old CE retailer continues to hang in the balance.