Categories: BankruptcyChapter 11

RadioShack Filing Chapter 11 Bankruptcy

RadioShack’s ongoing problems have been well documented, and most people in the industry have guessed that it would eventually be filing for bankruptcy. In September 2014, the New York Times reported RadioShack claimed it would soon have to file Chapter 11 unless there was an unexpected external solution. It wasn’t until February 2015, however, that RadioShack actually went through with it and filed the formal paperwork. The question that alarms many struggling businesses is how they will know whether they should be filing for Chapter 11.

WHAT HAPPENS TO RADIOSHACK NOW THAT IT’S FILED CHAPTER 11 BANKRUPTCY?

It’s been years since RadioShack has turned a profit, and the reorganization structure they’ve chosen under Chapter 11 has resulted in the majority of the assets being sold off and reorganized under other companies. Reuters reports that RadioShack has sold more than 2,400 stores. Currently, the New York Stock Exchange is delisting all of the RadioShack stock, and the business transition is continuing. Part of the plan submitted to courts was for most of the assets to be sold to Standard General. Value Walk, however, reports that there are dozens of bidders eager to obtain some portion of the RadioShack brand. So while RadioShack is being reorganized and restructured, it won’t disappear entirely.

Is Chapter 11 the Right Step for Your Business?

It’s always troubling when a business like RadioShack goes under. It’s been around for almost a hundred years. But the economic downturn combined with increased competition resulted in RadioShack being unable to turn a profit. The benefit that they have is that their brand is so well known that many other businesses are eager to obtain interests in the company, and so the brand won’t disappear. For smaller businesses or businesses that don’t provoke that kind of interest, you probably won’t get that kind of response. So filing Chapter 11 may be even more frightening.

  • These are some of the most common signs that filing Chapter 11 may be right for your business
  • Consistent decreases in revenue Increased expenses that outpace income
  • Dipping into personal funds or considering mortgaging home to finance failing business
  • Maxing out credit accounts for business
  • Falling behind on bills and business expenses or inability to meet minimum monthly payments
  • Employees or you going without pay
  • Foreclosure or collection actions pending against your business

In this situation, you as a business owner, even if you’re a sole proprietor, may need to consider filing for Chapter 11. Chapter 11 allows you to

  • reorganize your business assets
  • develop a different plan for repaying your creditors
  • avoid certain debts, particularly unsecured debts
  • get breathing space from dealing with creditors

RadioShack’s decision to file Chapter 11 is troubling because it had been around so long. It’s easy to think that a longstanding business which has seen so much success wouldn’t need to file bankruptcy. But, in reality, it can happen to any business. Even yours. If you find yourself struggling to make payments, maxing out your credit accounts, falling behind on business expenses, and receiving foreclosure or collection notices, you may need to consider it.


But you don’t have to do it alone. Consider talking with an attorney at Van Horn Law Group to guide you out of the mess.

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Published by
Chad Van Horn

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