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RadioShack Case Conversion Objection Filed

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According to the U.S. Bankruptcy Court docket, RadioShack filed an objection to Salus Capital Partners’ motion to convert the Chapter 11 proceeding to a liquidation under Chapter 7.

The Debtors assert, “Despite that success and an acknowledgement that the liquidation process is not yet complete, Salus requests that the Court halt the ongoing and unfinished liquidation process to invoke the drastic remedy of a chapter 7 conversion. It seeks this extraordinary relief based on unsupported allegations that are simply not true. First, the estates are not administratively insolvent and the Debtors have not accrued administrative expenses at unsustainable levels or beyond their ability to pay. As Salus well knows based on its involvement in every budget negotiation since the outset of these cases, the Debtors have met their ongoing obligations as they have come due.”

The objection continues, “Additionally, expenses have remained within budget despite higher than anticipated professional fees and the Debtors have not been in violation of any of the disbursement covenants associated with those budgets. Further, the Debtors have sufficient cash, collateral carve-outs and an agreed subordination by Salus (which Salus acknowledges in its Motion to Convert) to pay anticipated future expenses and anticipated priority claims. Second, contrary to Salus’s assertion, there is more to achieve in these chapter 11 proceedings. As Salus readily admits, the liquidation of assets is not yet complete. Moreover, the Debtors continue to have a variety of obligations under a transition services agreement with General Wireless, an agreement that, by its terms, will be breached by a conversion to chapter. Further, intercreditor allocation disputes that have already been the subject of discussions among the parties remain to be resolved, the disposition of well over a thousand remaining leases and executory contracts needs to be considered and determined, and a number of issues regarding the continuing wind down of the Debtors’ operations need to be addressed.”

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