General Wireless Operations Inc., more commonly known as RadioShack, was obliged to resort to bankruptcy protection. This isn’t the first time the company had to go through this process. Two years ago, the chain of electronics stores was no longer present in the New York Stock Exchange. RadioShack had no other choice but to file for Chapter 11 bankruptcy. In May 2015, General Wireless bought the assets for a total of $26.2 million. Even though the company went through a complete rebranding strategy, it faces struggling times once more.
On Wednesday, the company founded by Sprint Corp. had to file for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court, Delaware. Two years ago, General Wireless took upon itself the difficult task to rebuilt RadioShack from its ashes. After a change of direction, the old RadioShack locations were used as wireless stores for Sprint products only.
The business was still feeling the pressures from its first bankruptcy filing in 2015. RadioShack has always been struggling to compete with its rivals. The company tried to coordinate a transition from brick-and-mortar concepts to e-commerce, but with no positive results. Other issues derived from diminished store traffic of customers. According to undisclosed sources that are familiar with this private process, the bankruptcy protection has high chances to end up in liquidation.
The Delaware court received the bankruptcy filing according to which General Wireless possessed liabilities and assets in the $100 million range to $500 million. As a consequence, RadioShack is going to close around 200 stores that are dragging the business down. The other 1,300 open locations will be the subject of a reevaluation. The company will assess under which format to continue its activity there.
Moreover, another statement on behalf of the wireless provider mentioned that Sprint Inc. is going to have several hundred stores under its own brand from now on. Sprint declared that the financial struggles at RadioShack are not the result of the performance of its product sales.
The main issue was that the chain of stores got its customers familiar with massive discounts. Thus, consumers refrained from shopping unless they caught attractive price drops. Moreover, another agent of bankruptcy protection was played by the influx of fake goods that entered the U.S. market from manufacturers abroad.
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