Radio Shack May Need Bankruptcy Protection

May 21, 2014 | Bankruptcy

Have you ever wanted to build your own TV from scratch? Have you ever used precise electrical equipment to track down a blown capacitor and then rushed off to the store one Sunday afternoon to hurry up and replace it with a new one? Now your microwave is as good as new – right? After all, that bag of Pop Secret isn’t going to pop itself now is it?

What’s Old Is New Again – Or Is It?

If you are like the vast majority of Americans, when something goes wrong with your electronic gadgets at home, you don’t fix it yourself – you buy a new one. And unfortunately for Radioshack, it’s probably not the first place you visit for a replacement. 

To be fair to Radioshack, it’s not just a mini warehouse full of obscure electrical components. Over the years, it has attempted to keep up with the times by offering car stereos, personal computers, electronic toys and even cell phones. But it has been struggling economically for years. 

Shack-Infested Waters 

In a market dominated by Wal-Mart and the internet, where even giants like Circuit City died a quick death and Best Buy continues to struggle, Radioshack faces similar hurdles. And it has the additional economic drag of having to keep shelves stocked full of obscure items the average consumer rarely purchases. 

Earlier this year, Radioshack attempted to close a large number of stores across the country. However, it was widely reported online that agreements with its creditors restricted the amount of stores it was allowed to close. If Radioshack can’t eliminate underperforming locations, it may be left with little choice but to file for bankruptcy. 

Shacking Up With Bankruptcy 

Chapter 11 bankruptcy might be the key to preventing Radioshack from becoming just a memory. It would allow it to reorganize while being protected from its creditors. Underperforming stores could be closed, and its obligations would be renegotiated. Filing for Chapter 11 is not a guarantee of survival, but it will at least give Radioshack a fighting chance. And if you are the rare type who enjoys tinkering with your toasted toaster over rather than dumping it in the trash, there may still be a store for you. 

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