It has been in the news for months that RadioShackâ€™s finances were weak. People speculated that the electronics retailer would file for bankruptcy. Those people were correct. On February 5, 2015, the company filed for Chapter 11 bankruptcy protection according to a February 9, 2015 Wall Street Journal article. The company hopes for its bankruptcy to proceed quickly. It filed the bankruptcy with a court on a Thursday. Their plan is to quickly close about 2,100 of its 4,000 stores. Going-out-of-business sales started Friday at over 1,700 of those stores. RadioShack, in its rush to go through bankruptcy, plans to close about 1,100 stores by the end of February.
With the rise of internet retailers, brick and mortar stores may be struggling. RadioShack is one of the oldest electronics stores in existence. Many of its locations are small or medium-sized stores. On the other hand, some other electronics stores are very large, but those have faced financial difficulty amid competition in recent years, too.
RadioShack plans to sale other stores at auction in just over one month and is working with a company to get out of its leases as quickly as possible in stores that it is closing. When a business files for bankruptcy, it typically chooses Chapter 11 bankruptcy, whereas a person usually chooses Chapter 7 or 13. In Chapter 11 bankruptcy, a business must restructure its finances, most notably its debt. RadioShack is in talks with its some of its lenders and creditors. The company hopes to restructure certain debts and to end up with financing that will create $20 million for the company. Unsecured creditors, or creditors who do not have any physical assets or collateral, also need to agree to this financing scheme, but a Bankruptcy Court judge has given it â€œinterimâ€ approval according to the article. The company owes these unsecured creditors $400 million, but they were not largely involved in these restructuring talks as of yet.
While some people have nearly sentimental memories about experiences at their local RadioShack store, the company, at the end of the day, needs to stay afloat. Does RadioShackâ€™s bankruptcy represent the demise of the brick and mortar store? Only time will tell.
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