When Radioshack announced earlier this year that it was entering bankrupcy for the second time, we all assumed that it was simply because Amazon had made it irrelevant. But according to a new lawsuit filed by Radioshack’s creditors, Sprint might be to blame for the ‘shack’s ultimate demise.
When Radioshack emerged from its first round of bankrupcy in 2015, it struck a deal with Sprint to co-brand some Radioshack stores as Sprint locations. The deal handed Radioshack a reason (and cash!) to keep existing, and it gave Sprint an instant physical foothold to help fight T-Mobile.
But according to the lawsuit, spotted by Reuters, Sprint didn’t hold up its end of the contract. It failed to supply inventory or support to the co-located stores, causing even more problems for the beleagured Radioshack locations.
Worse, Sprint allegedly used confidential information from its Radioshack deal to open uo 200 competing stores near prime Radioshack locations in 2016. “Sprint’s action destroyed nearly 6,000 RadioShack jobs,” the lawsuit claims. In return, creditors are seeking $500 million in damages from Sprint.
That would be a big problem for Sprint and SoftBank, the Japanese telecom company that owns it. Sprint is already mired in debt and looking for a merger or takeover deal. This pending lawsuit, complete with astronomical potential damages, could do harm to SoftBank’s prospect of getting a good return.
A Sprint representative denied the allegations to Reuters, saying that “the company was disappointed by the creditors’ committee action and Sprint expected to defend the matter vigorously.”