Advertisement

RadioShack Settlement Approval Sought

Advertisement

According to the U.S. Bankruptcy Court docket, RadioShack a motion for an order authorizing and approving a settlement with AT&T and General Wireless, pursuant to Rule 9019.

The motion explains, “The relationship between AT&T and the Debtors is governed by, among other things, the AT&T Strategic Alliance Agreement (the ‘AT&T Agreement’). The AT&T Agreement governs the relationship between AT&T and the Debtors with respect to the purchase and sale of AT&T branded wireless devices and plans. Under the terms of the AT&T Agreement, the Debtors earn commissions for wireless devices and plans sold by the Debtors and are entitled to certain fees (the ‘Account Maintenance Fees’). In the absence of the terms outlined in the Settlement, however, the Debtors may lose the right to receive Account Maintenance Fees in the event the AT&T Agreement is terminated. Under the terms of the stalking horse agreement among the Debtors and General Wireless, the Debtors have proposed to assume and assign the AT&T Agreement to General Wireless in connection with the sale of its assets. AT&T has raised various informal objections to the proposed assumption and assignment of the AT&T Agreement.”

The motion continues, “At a hearing on March 19, 2015, and pursuant to the Settlement, the Parties announced the proposed Settlement and outlined the terms of the Settlement on the record for the benefit of all parties. The Court indicated that it would schedule a hearing on this motion to be heard at the sale hearing on March 26, 2015.” Under the settlement, “AT&T shall purchase from Debtors up to $10.5 million of new, unopened mobile devices (‘Qualified Inventory’) at 100% of book value (the ‘Inventory Purchase Price’). If Debtors deliver less than $10.5 million of Qualified Inventory to AT&T, then the Inventory Purchase Price shall be equal to the book value of the Qualified Inventory…The AT&T Alliance Agreement shall be deemed terminated as of March 31, 2015. AT&T shall pay $5.5 million to Debtors no later than 10 days after the Termination Date….AT&T and the Debtors agree to mutually release each other of any and all claims and causes of actions.”

The Court scheduled a March 26, 2015 hearing to consider the motion. Read more about the RSH bankruptcy.