RadioShack, the iconic consumer electronics chain, was driven into bankruptcy because of a takeover scheme by hedge fund Standard General, according to a lawsuit by a committee for creditors who say they are owed more than $500 million.
By delaying actions that might have preserved some of the chain’s value, Standard General allegedly sought to take over Radio Shack at the lowest price possible. The lawsuit said turmoil at the company in the months led to RadioShack’s February bankruptcy, including an October transaction that paved the way for the hedge fund to win control.
“A mere four months after the October 2014 transaction, RadioShack met its inevitable fate of Chapter 11 in the Delaware bankruptcy court,” low-ranking creditors said in the complaint, filed Monday by the law firm Quinn Emanuel, Urquhart & Sullivan.
“The company’s crash-landing into bankruptcy involved immediate closure of half of Radio Shack’s operations and handed over the company’s most valuable assets to Standard General less than 60 days later.”
After filing bankruptcy, the company closed about half its 4,000 stores and in March sold about 1,700 of the remainder to Standard General, which had been the company’s biggest shareholder, for about $145.5 million.
Richard Hahn, a bankruptcy lawyer for Standard General, did not immediately reply to an e-mail requesting comment on the lawsuit.
