US electronics retailer RadioShack is looking to emerge from its latest bankruptcy proceeding with a new focus on its e-commerce business. However, the company is banking on winning a lawsuit filed against Sprint to fund its recovery.
According to a report from the Fort Worth Star-Telegram, RadioShack will head to court in Wilmington, Delaware, on 25 October for a hearing on its reorganisation plan. The company proposed to move forward with an online-centric model, supplemented by 27 corporate-owned stores and a smattering of 400 franchised dealer locations in small communities across the country. In particular, the company plans to maintain company-owned locations in Texas, Colorado and New York.
In its prime, RadioShack owned more than 7,000 stores across the country. The company first filed for bankruptcy in 2015 after a long slog against competitors like online retailer Amazon and operator-owned phone stores. Coming out of the proceeding, RadioShack inked a deal with US operator Sprint to co-brand more than 1,400 retail locations. The move helped Sprint double its retail presence.
However, RadioShack filed for bankruptcy a second time in March this year, resulting in the immediate closure of around 200 locations and leaving in jeopardy some 1,300 more. In a press release at the time, RadioShack said the filing was triggered by a number of factors, “most notably the surprisingly poor performance of mobility sales.”
Kevin Crull, Sprint’s president of omnichannel sales, in March said the operator was planning to take over “several hundred” of the retail locations left in limbo by the filing. Sprint since embarked on a massive distribution push, opening hundreds of new locations across the US.
In June, though, RadioShack filed a lawsuit against Sprint alleging the operator used confidential information gleaned from the companies’ co-branding venture to open 200 competing stores. RadioShack also claimed Sprint failed to provide inventory and staff for the shared locations, and said the move hindered its success. RadioShack is seeking $500 million in damages, which would be the primary source of funding used to pay its creditors and support the company’s recovery efforts.