General Wireless Operations, the successor to RadioShack, allegedly is preparing for bankruptcy to once and for all shut down the electronics retailer.
The Fort Worth company is expected to file a Chapter 11 petition within a matter of days, and it likely will result in liquidation, unnamed sources told Bloomberg.
General Wireless, which does business as RadioShack, was formed through the partnership of Sprint (S) - Get Report and New York hedge fund Standard General in summer 2015, when it acquired the assets of RadioShack out of bankruptcy.
The bankrupt retailer agreed to sell its intellectual property to General Wireless in May 2015 for $26.2 million, while Standard General in April 2015 won approval to acquire a major portion of RadioShack's stores for $142.09 million. The IP sale closed in June 2015.
General Wireless did not respond to a request for comment, and Standard General declined immediate comment.
RadioShack closed about half of its 4,000 stores in its Chapter 11 case, filed Feb. 5, 2015, in the Wilmington, Del., bankruptcy court. Standard General, a creditor in the case, purchased 1,700 locations and created General Wireless with Sprint.
The debtor's estate, renamed RS Legacy, on Oct. 8, 2015, completed a wind-down after its liquidation plan won confirmation just a few days earlier. The plan gave RadioShack's largest secured creditor, Salus Capital Partners, a $58.2 million cash payment on a $250 million term loan. Salus waived its deficiency claims under a settlement with other lenders.
RadioShack, amid a decline in mall traffic and a consumer shift to e-commerce, filed for bankruptcy after falling behind on payments it owed to Salus. In its petition, RadioShack reported $1.2 billion in assets and $1.39 billion in liabilities as of Nov. 1, 2014.
A General Wireless petition would come alongside a general decline in retail and as electronics giant Best Buy (BBY) - Get Report , in particular, struggles to generate sales. Last week, the company posted a fourth-quarter revenue miss and a same-store sales slip of 0.9% in North America.
For the past few years, Best Buy has failed to drive significant revenue growth, and the company is only expecting a meager 1.5% sales increase in the first quarter of 2017.
General Wireless sells RadioShack products online and at its 1,743 stores, primarily located in outlets alongside Sprint shops.
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