(Updates throughout with judge approving auction process and loan)
By Tom Hals
WILMINGTON, Del., Feb 25 (Reuters) - RadioShack Corp got approval on Wednesday from a U.S. Bankruptcy Court judge to auction about 2,000 stores with an initial $200 million bid from the Standard General hedge fund.
The electronics retailer also received approval to borrow up to $285 million. However, the judge hearing the case, Brendan Shannon in Wilmington, Delaware, said the associated fees for the loan had to be cut, calling it “money for nothing.”
Only about $35 million of the loan is new liquidity, with the rest refinancing previous loans.
Shannon scheduled the auction for March 23 if competing bids are received.
Wednesday’s hearing was the first time the bankrupt company has put an estimated value on the sale agreement with Standard General, which will keep about half of RadioShack’s stores open and operate them under an agreement with Sprint Corp.
At the same hearing, RadioShack lawyers said the company had received bids for leases to 205 of the 1,100 locations it plans to close this month, including interest from a unit of the GameStop Corp retail chain.
The lawyers also said the company’s name and intellectual property would be auctioned separately and that Standard General agreed to an initial bid of at least $20 million.
Shannon denied a request by the official committee of unsecured creditors to force Standard General to bid in cash, but said he needed to know more details about the exact value of their bid.
Standard General is planning what is known as a “credit bid,” using the $55 million it is owed on RadioShack loans to help pay for the stores.
In addition, Standard General plans to offer loans held by other hedge funds, which could bring its credit bid to $130 million.
RadioShack’s financial advisor, David Kurtz, the head of restructuring at Lazard Ltd, said Standard General would bid $75 million in cash.
While Wednesday’s hearing was under way, RadioShack was simultaneously holding an auction for the leases to the 1,100 stores it will close this month.
RadioShack lawyer Tom Howley said GameStop’s Spring Communications was interested in some locations and called this a “significant development” without elaborating.
GameStop has been aggressively expanding its Spring Mobile business, which sells AT&T cellphones.
RadioShack filed for bankruptcy earlier this month after struggling for years against online competitors.
The case is In re RadioShack Corp, U.S. Bankruptcy Court, District of Delaware, No. 15-10197. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn and David Gregorio)