When Milton and Theodore Deutschmann came up with the idea for a store to sell ham radio parts, it’s doubtful they envisioned their modest idea would last 94 years and become an iconic part of American business.
But the Deutschmann brothers, who called their store Radio Shack in homage to the small wooden rooms that housed radio equipment on ships, had a dream that eventually could not stem the test of time.
Radio Shack Corporation (RSHC.PK) filed for Chapter 11 bankruptcy protection Thursday in a move that was long rumored and widely expected after 11 operating at a loss since 2011.
Unlike other business like Circuit City, Borders and Linen & Things, Radio Shack won’t disappear from the landscape totally. Radio Shack said in a statement that Standard General, its largest shareholder, will purchase as many as 2,400 of the 4,100 stores. Sprint Corp. wireless would operate as many as 1,750 of those stores and occupy approximately one-third of the space selling cell phones as well as Radio Shack products.
Radio Shack currently has 27,000 employees, $1.2 billion of assets and $1.39 billion of debt. Over the past year Radio Shack tried to avoid bankruptcy by closing 400 stores and cutting its work force by 19 percent.
Since changes in the 2005 bankruptcy laws, only 12 percent of the retail companies were able to emerge from bankruptcy, down from 50 percent in before 2005.
Radio Shack has yet to announce which stores will remain open with Sprint and said it will continue to try and sell its underperforming outlets to potential buyers.