Did Sprint Cause RadioShack’s Recent Bankruptcy?

: Chris Lee Law Firm

  Filed under: News

radio shack bankruptcyThe long and painful demise of RadioShack has gained much media coverage over the past few years. This downward spiral began in 2015 when RadioShack filed for bankruptcy to reorganize the company’s debt, which included co-branding nearly 1,400 stores with Sprint. RadioShack executives were highly optimistic that the partnership would be beneficial and put the gadget store back on the road towards profitability. RadioShack was forced to declare a second bankruptcy in early 2017, and the company went through its final, wholesale liquidation of merchandise including store fixtures. Many assumed that the retailer woes were due to the digital disruption that many big box chain retailers such as Sears Canada, Payless, and The Limited are also summering from.  In a recent lawsuit filed in June of 2017 a different picture of corporate misuse of confidential information by Sprint has come to light.

According to a $500 million dollar lawsuit filed against Sprint this week, the mobile telecommunications company sabotaged RadioShack’s comeback by opening hundreds of competing stores in the most successful areas. When sales were good at a partner location, Sprint would open up a separate store in the same area in an attempt to rake in more profits.

Now that nearly all RadioShack’s stores have been closed, this lawsuit claims that the mobile carrier used the inside information gained by partnering with RadioShack to carve out more market share for itself. The inside information was knowledge of the best locations to set up new Sprint retail outlets. The lawsuit goes on to claim that the fourth largest US cell phone carrier was responsible for destroying somewhere in the neighborhood of 6,000 RadioShack jobs. Sprint has faced its own cash flow problems as of late so this may lend to the credibility to the story.

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