Parties Argue Over Terms In RadioShack Bankruptcy

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Parties Argue Over Terms In RadioShack Bankruptcy
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Radioshack might be in bankruptcy, but like Lehman Brothers the fight over the company is far from over.

Salus Capital Partners, the Harbinger Group unit that loaned money to RadioShack, has filed a lawsuit against other lenders in the electronics retailer’s bankruptcy case that seeks to put limits on credit bidding at an impending bankruptcy auction.

Salus says last-minute financing maneuvers made last year violated agreements among RadioShack’s lenders.

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Salus argues that to make things right, senior lenders planning to use debt cancellation as currency at a bankruptcy auction are limited to just  $111 million. Any amounts over $111 million must be in cash.

Standard General LP, the major shareholder and lender who will lead the bidding at Monday’s bankruptcy auction, did not reply for a request for comment.

Further developments in RadioShack bankruptcy

A Wall Street Journal article notes that Salus is a second-tier lender, and is owed $250 million. RadioShack’s legal team has said they anticipate enough value to cover what is owed top-ranking lenders, but maybe not enough to pay Salus in full.

The new lawsuit argues that RadioShack’s loan transactions led to unfair payouts, and that more mone