Latest Filing in RadioShack Bankruptcy by Official Committee of Unsecured Creditors

OBJECTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO MOTION OF SALUS CAPITAL PARTNERS, LLC TO CONVERT DEBTORS’ CHAPTER 11 CASES TO CASES UNDER CHAPTER 7 OF THE BANKRUPTCY CODE

1. The Motion is nothing more than a self-serving attempt by Salus to improve its under secured status at the expense of all other constituencies which have worked diligently to bring these complex chapter 11 cases towards a successful conclusion on July 22, 2015 pursuant to the Debtors’ plan of liquidation [Docket No. 2404 (the “Plan”)].

2. Salus’s primary argument is that conversion is warranted under Section 1112(b)(4)(A) of the Bankruptcy Code because there is allegedly: (i) a substantial or continuing loss to or diminution of the estate, and (ii) the absence of a reasonable likelihood of rehabilitation. The argument has no merit as the Debtors have proposed the feasible Plan which will be confirmed on July 22, 2015. Also, the record of these proceedings make clear that the Debtors’ assets have been maximized not diminished, for the benefit of Salus.

3. All parties, including Salus, knew from the very outset of these proceedings that the best way to maximize value was by prompt sales of the Debtors’ assets. Salus supported the sales processes in order to maximize the value of its collateral. Despite never providing any debtor-in-possession financing2, Salus has benefitted from the successful disposition of estate assets, which is virtually complete. 3 Furthermore, Salus (together with the SCP Agent and Cerberus) has received almost $28 million as post-petition adequate protection (including principal, interest and legal fees) from the Debtors’ estates. Now, when the time has come to pay its fair share of the costs and expenses of these proceedings (by 506(c) surcharge and application of the full $39 million subordination), Salus seeks conversion. Accordingly, the Motion should be seen by the Court for what it really is – a last-minute ploy to obtain additional leverage now that Salus has achieved the full benefit of maximizing the value of its collateral in chapter 11 without paying the attendant costs and expenses. The Motion should be denied.
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10. On June 5, 2015, the Debtors filed a motion for an order scheduling a combined hearing on approval of their proposed disclosure statement and liquidating plan and establishing solicitation procedures (the “Scheduling Motion”, Docket No. 2387). The Scheduling Motion states that based on current status of their efforts, the Debtors expect to largely complete the sale or liquidation of their non-litigation assets by the end of June, 2015.

11. The Scheduling Motion makes clear that the Debtors are currently formulating the terms of the Plan and intend to file it (in combination with a disclosure statement) by a date that would permit a hearing on confirmation of the Plan on or about July 22, 2015. The Plan was filed on June 12, 2015 (Docket No. 2404).