RadioShack committee questions DIP loan necessity, budgeted payments

By Caroline Salls

Pittsburgh, Feb. 24 – RadioShack Corp.’s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Delaware to reconsider its interim order approving the company’s debtor-in-possession financing, according to a Tuesday court filing.

“It has come to the committee’s attention that payments have been made under the guise of the budget attached to the interim DIP order even though the order itself may not have authorized the payments,” the motion said.

The committee said it filed the reconsideration motion to ensure the court has the judicial power to modify the interim order after considering the DIP financing motion on a final basis. The final hearing is scheduled for Feb. 25.

According to the motion, the court based its entry of the interim order, including the approval of a budget, on RadioShack’s “immediate liquidity needs and the exigencies of these Chapter 11 cases just a few days after the commencement of these cases.”

The committee said it plans to show at the final hearing that the company can operate its business solely through the use of cash collateral and that a roll-up, mandatory pay-down and excessive fees are not warranted and are “detrimental to the estates and the product of lender over-reaching.”

RadioShack is a Fort Worth, Texas, technology retailer that filed for bankruptcy on Feb. 5. Its Chapter 11 case number is 15-10197.

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