Sprint to create new
As had been rumored heavily reported earlier this week, we can confirm that RadioShack has filed for Chapter 11 bankruptcy. Today’s announcement brought an internal memo written by company CEO Joseph C. Magnacca, who outlined the “lengthy” bankruptcy process confirming key details of the announcement, including the sale of “between 1,500 and 2,400” company owned stories to Radio Shack affiliate Standard General and plans for new “dedicated mobility ‘store within a store’ retail” in 1,750 of those acquired stores.
Click through after the break to read the full corporate memo, as delivered to RadioShack stores this evening.
Dear Team RadioShack,
As you know, the management team and Board of Directors have been through a lengthy process of pursuing solutions for our company, including plans to right size our footprint by closing a significant number of stores. In order to close those stores and restructure the company, today we announced that we will commence a Chapter 11 bankruptcy process.
This was a difficult decision for a proud company and historic brand. But we believe that this restructuring is a necessary next step as we move forward with a long-term solution for our challengers. Our objective is to maximize value for our stakeholders. The process has several components:
• An affiliate of Standard General, who you will recall provided financing for us several months ago, has agreed to purchase between 1,500 and 2,400 of our company owned stores, subject to court approval and the satisfaction of certain conditions. In addition, we will conduct a competitive action process, which means other parties have the ability to bid on those stores. Any purchase under this sales process is subject to Court approval.
• Sprint has agreed in principle to establish a new dedicated mobility “store within a store” retail presence in up to 1,750 of the acquired stores. This arrangement is subject to negotiation of final agreements and is also subject to Court approval.
• We are seeking court approval of an agreement with Hilco Merchant Resources to assist with the closing of the balance of our company owned stores in the U.S.
Discussions are underway with interested parties to sell all of the company’s remaining assets.
Because it will take time for this process to play out, exactly what we will look like going forward will not be determined until the store auction process is concluded and we complete an orderly sale of our other assets. We are seeking court approval to conduct the auction in mid March. I recognize that means a lot of questions and uncertainty in the meantime. For example, while the Chapter 11 filing does not include our Asia operations, our Mexico operations, or our franchise partners across the globe, they may be impacted depending on the outcome of the sale process. It’s also unclear at this point what will happen with our headquarters office. We will do our best to keep you up to date as we know more.
We have filed various requests with the bankruptcy court, known as “First Day Motions” seeking to pay or honor certain pre-filing obligations to employees, customers and vendors. For our associates this includes authority to continue, without interruption, the payment of payroll, medical and dental coverage, and other important services to our associates as usual. This is standard practice in these types of bankruptcy filings. Once the court has reviewed and acted upon these motions, which we expect will happen quickly, we will update you to confirm the details.
I want each of you to know while this has been a challenging time to lead the company, I continue to be proud of the work we have done together improving our store,s launching successful services like Fix It Herel and focusing on the customer experience. In my two years here, I have seen incredible dedication, talent and loyalty. I continue to be amazed by the volume of positive letters we receive each day complimenting the skills and helpfulness of our associates.
We are losing good people as we close stores. I was fortunate enough to know some of these associates. However let’s also remember that we plan to have more than a thousand corporate stores serving thousands of customers every day. Help me ensure they continue to receive GREAT RadioShack service, even as we enter a new phase.
We will keep you informed as we move forward. Thank you very much.