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RadioShack lender Salus Capital eyes $129 million paid to new lenders
By Kali Hays
New York, March 18 – RadioShack Corp.’s pre-bankruptcy lender and agent Salus Capital Partners, LLC filed a complaint against all company creditors that have received debt payments while a portion of Salus’ debt remains outstanding, according to a March 17 filing with the U.S. Bankruptcy Court for the District of Delaware.
In December 2013, Salus provided $250 million in term loan financing to RadioShack secured on a first-lien basis by substantially all of the company’s assets.
According to the complaint, a group of hedge funds, including RadioShack’s proposed asset purchaser Standard General LP affiliate General Wireless, Inc., that acquired additional debt from another secured lender GE Capital have received $129 million of payments while Salus still has amounts outstanding.
“Because the term out loans are contractually subordinated to the Salus term loan, the $129 million repaid to the hedge fund lenders must be disgorged and paid over to the Salus lenders,” the complaint said.
Salus went on to claim that no outstanding balance of the hedge fund lenders could be repaid until its term loan is repaid in full.
In addition, Salus asserted that the right to credit bid on RadioShack’s assets is capped at a combined total of $111 million until its term loan is repaid in full, according to the complaint.
The lender asked that the court order the hedge fund lenders to disgorge all payments they have received and to declare the credit bid cap at $111 million.
RadioShack is a Fort Worth-based technology retailer that filed for bankruptcy on Feb. 5. Its Chapter 11 case number is 15-10197.
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