BREAKING: Radio Shack to ‘Sprint’ out of Chapter 11

Once popular Radio Shack chain to be owned by major hedge fund Standard General with an assist from Sprint, which will take up to one-third of the space in each store for sales and service of its products.

Radio Shack store in 2011.
Free-standing Radio Shack store in Texas, circa 2011. Less than half of Radio Shack's stores will survive in last-minute bankruptcy rescue aided by Sprint. (Photo via Wikipedia)

WASHINGTON, April 1, 2015 − Several sources report that Radio Shack’s near-death experience with Chapter 11 bankruptcy appears to be over. Just when it seemed that the Radio Shack story would end with a liquidation sale, hedge fund Standard General has closed a deal to keep 1,740 Radio Shack locations (out of the somewhat more than 4,000 that remain) open and running.

In something of a surprise, struggling cell phone carrier U.S. Sprint stepped in to cement the final deal. According to Reuters, surviving Radio Shack stores will share up to a third of their floor space with Sprint products and services. Bankruptcy Judge Brendan Shannon decided the case over protests from some of Radio Shack’s creditors.

According to the Wall Street Journal,

“Sales of cellphones, a crucial traffic driver that nevertheless had long since stopped being very profitable for the chain, will be outsourced to Sprint. To reduce clutter, products like laptops, tablets and digital cameras will be cut back, as will name brands that don’t have much of a following. That will leave RadioShack to focus on higher margin house-brand chargers, batteries and speakers.”

One key problem remains for what’s left of the chain, according to the WSJ report. One of the company’s major, disgruntled creditors actually holds the trademark and may not want to give it up.

“Standard General will operate the stores, but Salus Capital Partners, which is owed $150 million, has first claim on RadioShack’s trademarks, patents and customer data. Unless Standard General can persuade Salus to sell it the intellectual property that defines the brand, the new RadioShack may not be called RadioShack for long.”

Once a major player in the electronics and electronics hobbyist arena, the modern Radio Shack had an unusual evolution. Originally a store whose business actually focused on selling AM and FM radios, ham radio gear, walkie-talkies and electronics parts, the old chain found itself verging on bankruptcy in the early 1960s. It was saved by Tandy Corp., a leather hobby chain that many Boomers will remember as a purveyor of goods to youth activities, Boy and Girl Scouts and everyday hobbyists looking to work in leather goods, making anything from lanyards to basic moccasins.

Tandy turned Radio Shack around to the point where the buyout company assumed the corporate name of its acquisition and significantly expanded its scope and footprint in the electronics world, even developing and marketing one of the most popular early desktop PCs, the TRS-80. Somewhat affectionately known as the “Trash 80” to the enterprising engineers who bought mass quantities of this machine back in the late 1970s and early 1980s, the Radio Shack computer was instrumental in the early years of the personal computing revolution.

Gradually overwhelmed by competitors in that business, Radio Shack got out of the computer game while continuing to supply plenty of batteries and parts to computer hobbyists. Later on, it moved into selling cellular phones, which made them another tidy profit before that business, too, began to wane and decentralize, leaving the 21st century Radio Shack with little to distinguish itself, product-wise, particularly as online sales of electronics parts began to overwhelm bricks-and-mortar purveyors of the same product selection, leading to Radio Shack’s latest bankruptcy and near failure.

Details are still evolving. But at least many Radio Shack employees, whose jobs were in serious jeopardy, will still be employed. The Sprint portion of each surviving location, however, will employ its own people on site for sales and service.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17