RadioShack marched toward its bankruptcy filing in slow motion — but now a controversial hedge fund wants to press the “fast-forward” button on an auction of its assets.
New York-based Standard General LP — which was accused earlier this week by creditors of delaying RadioShack’s bankruptcy so it could profit on well-timed credit derivatives — is calling for a fast-track auction of the company’s most profitable stores — to be completed in just over a month.
Headed by publicity-shy investor Soohyung Kim, Standard General has submitted a so-called “stalking horse” bid to acquire as many as 2,400 of RadioShack’s 4,000-plus locations — while shuttering the rest in the wake of its Feb. 5 Chapter 11 filing.
In addition to beefing about tight bidding deadlines, a committee of unsecured creditors complained this week that the rules for the auction have been stacked unfairly in favor of Standard General.
Specifically, creditors charge that the hedge fund has exploited its status as a secured lender to claim store leases in its bid at prices far below market rates — effectively giving it an unfair discount versus outside bidders that could be worth tens of millions of dollars.
That threatens a “chilling effect” on the auction, even as more than 10 prospective bidders have accessed RadioShack’s financials and “are determining whether to bid at this frenzied pace,” creditors said in a late Wednesday motion in Bankruptcy Court.
To level the playing field, creditors think Standard General “should be required to bid cash like any other bidder.”
While the identity of the outside bidders couldn’t immediately be confirmed, Amazon has been among the firms circling RadioShack’s best locations, according to reports.
Industry insiders have likewise speculated that wireless carriers like AT&T — or even tech giants such as Samsung, Google and Microsoft — might scoop up the stores.
Indeed, Standard General’s bid includes an agreement with wireless giant Sprint that would co-brand 1,750 locations. That’s yet another side deal, creditors griped, that appears to boost Standard General with no benefit to creditors.
“These allegations are without substance or merit and threaten to derail a material opportunity for the company’s stakeholders,” Standard General said in a statement Thursday.