Bankruptcy Filing For RadioShack Corporation (RSH)


inside radioshack

Push has come to a shove for RadioShack Corporation (NYSE:RSH). The electronics retailer is said to be preparing to make a bankruptcy filing as soon as next month. The filing could actually come in the first week of next month, suggesting how serious things have got for RadioShack. The company has already contacted some lenders to support it with a loan to fund operations during the bankruptcy period. It is not certain whether RadioShack would sell assets in the bankruptcy case or look to other debt-restructuring opportunities that may be available to it.

Deal not certain

RadioShack Corporation (NYSE:RSH) is said to be in discussions with a private-equity firm in what could yield a deal to sell RadioShack assets out of bankruptcy. However, there is no guarantee that a deal would be sealed between the company and the private-equity firm. If talks with the private-equity firm fail to produce a favorable deal, the retailer may seek to try debt reduction and restructuring arrangements with its lenders in the bankruptcy court. However, this being a bankruptcy situation, things can always change at the last minute.

Lenders prevent store closure

In a security filing last month, RadioShack warned that it could file for bankruptcy protection if it failed to raise enough funds or its lenders continued to be tough on it. The company attempted last year to close nearly 1,100 stores in an effort to cut costs so that it could keep its business going. However, the plan was rejected by its lenders, citing an agreement that prevents the company from closing over 200 stores to preserve cash. The development only complicated matters for a company that was already facing almost acute financial a shortage.

RadioShack Corporation (NYSE:RSH) disclosed in November that it had a total of $62.6 million, which included $19.3 million in credit facility and $43.3 million in cash. However, given its nearly 4,300 stores in North America, the available cash was very small.

RadioShack Corporation (NYSE:RSH) has currently preferred not to discuss details of its bankruptcy plans.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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