Tuesday, January 18, 2022
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Judge worries that creditor disputes will stymie RadioShack asset sale

🕐 2 min read

WILMINGTON, Del. – RadioShack Corp. lender Salus Capital Partners said it won’t make a new bid in the auction for the bankrupt electronics chain’s assets.

Salus, which is vying with hedge fund Standard General for control of the retailer’s destiny, said last week that it was prepared to make another offer. Citing “new developments,” Anthony Clark, an attorney for Salus, sent a letter to the court Sunday saying no new bid would be forthcoming.

The judge overseeing the bankruptcy said that even if he eventually gives Standard General LP permission to buy the company, the sale may not close because of continuing disputes among the electronics retailers lenders.

U.S. Bankruptcy Judge Brendan Shannon made the comments Monday at a hearing in Wilmington, Delaware, in which he is being asked to approve the results of an auction that RadioShack says Standard General won. Lenders including the hedge fund Salus claim the auction was flawed.

Shannon said that even if he dismissed Salus’ objections and names Standard General the auction winner, complaints by other lenders may interfere with an effort to close the sale.

The buyer “may end up with a sale order it cannot do a lot with,” Shannon said.

The judge said that he doubted he had the power to resolve some of the disputes that could scuttle a closing.

“I do not have authority to enter the closing room to make” the parties take the actions they must to finish the sale, Shannon said.

The judge said he doesn’t understand all the complaints of a group known as the “First Out ABL Lenders,” which also filed an objection to the sale.

The ABL lenders include affiliates of distressed debt investor Mudrick Capital Management and BlueCrest Capital Management. The lenders hold more than $72 million in RadioShack debt.

Testimony continued Monday over the sale of assets to Standard General.

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