Thursday, February 5, 2015

Declaration of RadioShack Interim Head of Financial Planning

I, Stephen Coulombe, being duly sworn, deposes and states:
Although employed by FTI Consulting, Inc. ("FTI"), I have been engaged by RadioShack Corporation, one of the debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the "Debtors"), to serve as interim Head of Financial Planning and Analysis. I have held this position since December 15, 2014. [...]

During the due diligence discussions with the potential bidders, three specific challenges were identified to securing an acceptable agency agreement. First, the specific closing locations could not be immediately identified. Second, the impact on the terms of contracts with major mobility carriers in a chapter 11 scenario was uncertain. Third, the inventory levels in closing stores significantly deteriorated as the Debtors ceased replenishment of those stores. [...]

If the Consulting Agreement is not assumed on an interim basis, there will be tremendous harm to all stakeholders. The estate will lose the benefit of the momentum and preparation that has already been started by the Consultant in preparing to commence the Store Closing Sales. As such, the Store Closing Sales would be delayed, leading to loss of value achieved and increased administrative expenses. FTI estimates that just the payroll of each Closing Store costs approximately $2,300 per week. Therefore, if the Store Closing Sales are not permitted to go forward on an interim basis, and the Debtors are forced to delay the Store Closing Sales for even one week, the potential loss from ongoing payroll expenses could be over $4.8 million. [...]

Debtors may be able to reject the leases in many of the Initial Tranche Stores and the Second Tranche Stores before the end of February. However, delaying the start of the Store Closing Sales may cause the Debtors to pay for March rent at many of these stores, at a possible cost to the estate of up to $7 million.

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