RadioShack lender asks judge to intervene in auction

By Tom Hals

(Reuters) - A RadioShack Corp (RSHCQ.PK) lender asked a U.S. Bankruptcy Court judge to intervene in the auction of the electronics retailer and said it had submitted a bid to liquidate the chain that was "materially superior" to one favoured by RadioShack.

Salus Capital Partners said in a Wednesday court filing it had submitted a bid jointly with three liquidators to offer $271 million (50.38 trillion pounds) in cash at the auction that began on Monday.

The lender said, however, that RadioShack favoured a proposal from hedge fund Standard General, even though its bid included only $16.4 million in cash. Standard General planned to keep open about 1,740 RadioShack stores, many in conjunction with wireless operator Sprint Corp.

"The process was neither fair nor transparent, and there was never a level playing field for potential bidders," Salus said in the filing.

The outcome of the auction may rest with Judge Brendan Shannon. Salus asked Shannon to schedule a hearing before Thursday morning, when the judge is currently scheduled to approve the results of the auction. Shannon had not granted Salus's request for immediate hearing as of midday Wednesday, according to the court's docket.

The bidding began with a proposal worth around $145 million from Standard General. The private auction is taking place at the New York offices of the Jones Day law firm, and the money raised will go towards repaying RadioShack creditors.

Salus said the most recent $158.3 million bid from Standard General included little cash and most was being paid in the form of a credit bid, or debt forgiveness.

Standard General provided RadioShack with a $535 million financing package last year to help the retailer build up inventory for the key year-end shopping season.

Standard General partner David Glazek and a RadioShack spokeswoman declined to comment.

Salus' bid is conditioned in part on it being able to force other debt holders to disgorge $129 million in payments that RadioShack recently made, which Salus argues were improper.

RadioShack entered Chapter 11 bankruptcy in February with more than 4,000 stores. Video game retailer GameStop Corp plans to buy up to 163, which leaves more than 2,000 that will close by the end of March.

Founded in 1921, the chain was once the go-to retailer for electronics, but became increasingly irrelevant in the digital age.

The case is In Re: RadioShack Corp, U.S. Bankruptcy Court, District of Delaware, No. 15-10197

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler)