The lawsuit, filed Monday in U.S. District Court in Fort Worth, TX, by the committee representing RadioShack’s unsecured creditors, also names Wells Fargo and former chief executive officer Joseph Magnacca, alleging they helped Standard General take over the company at creditors’ expense.
The suit comes as the electronics retailer moves forward with a number of settlements aimed at speeding its exit from chapter 11 protection. The bankruptcy sale of RadioShack’s assets earlier this year raised only enough to cover the company’s top-ranking loans, leaving litigation against RadioShack’s owner and lender as the unsecured creditors best hope of seeing a recovery.
RadioShack’s unsecured creditors, including AT&T, landlords of RadioShack stores, former employees and holders of $330 million bonds, claim Standard General used Magnacca to outflank the company’s own financial advisers.
RadioShack lender Wells Fargo also helped Standard General by arranging a new loan for RadioShack in October although analysts at the bank knew the company was insolvent, according to the lawsuit.
Read the full news release here.