Something for Nothing Unlikely to Occur – Article: RadioShack, Salus Capital Spar Over Alleged Leveraged Loan Covenant Breach

RadioShack, Salus Capital Spar Over Alleged Leveraged Loan Covenant Breach

http://www.forbes.com/sites/spleverage/2014/12/02/radioshack-salus-capital-spar-over-alleged-leveraged-loan-covenant-breach/

The article explains that Salus and company extended RadioShack an asset-based loan secured, presumably, in real estate, inventory, and intangibles.  Now RadioShack, in what may be a smart business move, wishes to liquidate over one thousand stores.  Such a move, without permission by Salus and company, would be in breach of the terms of the loan; it is normal for such a note to restrict borrowers to only selling inventory unilaterally in the ordinary course of business.  Presumably, RadioShack’s plan would involve liquidating substantial real estate and inventory in closing numerous stores.  Oddly, RadioShack wants Salus and other lenders to approve the liquidation without Salus and others receiving anything – neither money nor new promises – in return.  Instead of quid pro quo, RadioShack wants something for nothing . . . from a borrower that is probably required to have loans backed by a set amount of collateral . . . only six years after many lenders were caught extending credit with insufficient collateral.

I just do not see these Christmas wishes happening.

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