RadioShack filed for bankruptcy protection on Thursday, in a long-expected move that will result in the struggling electronics retailer closing around half of its stores in the US and Canada.
The firm is seeking protection under Chapter 11 of US bankruptcy law, which will allow it to continue operations as it attempts to restructure its debts.
According to documents filed with the US Bankruptcy Court in Delaware, RadioShack held assets worth $1.2bn as of November 1, 2014, along with debts worth approximately $1.4bn.
The chain hasn't reported a quarterly profit since 2011, and with its shares trading for mere pennies, its stock was delisted by the New York Stock Exchange this week.
General Wireless, a subsidiary of hedge fund Standard General, has agreed to acquire between 1,500 and 2,400 of RadioShack's company-owned retail stores, which currently number around 4,400. Those locations not so acquired – described by the firm as "underperforming stores" – will be shuttered.
The approximately 1,000 RadioShack stores that are owned by franchisees and the company's operations in Asia and Mexico are not part of the bankruptcy.
As part of the arrangement, US mobile carrier Sprint will open a store-within-a-store presence in approximately 1,750 of the remaining RadioShack locations.
Earlier rumors had suggested that Sprint would take over operations of some of RadioShack's stores, but the carrier said on Thursday that it would take over around a third of the floor space of each store, which would still carry the RadioShack brand.
These locations will effectively be co-branded stores, however, and they will offer mobile devices for Sprint's network exclusively, along with RadioShack products.
"We've proven that our products and new offers drive traffic to stores," Sprint CEO Marcelo Claure said in a canned statement, "and this agreement would allow Sprint to grow branded distribution quickly and cost-effectively in prime locations. Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other's customers."
The deal would expand Sprint's retail presence considerably, as it currently only operates around 1,100 stores of its own.
RadioShack, meanwhile, has secured a $285m loan from a lender group led by investment firm DW Partners to help sustain its operations during bankruptcy. Other firms will also be able to bid on the retailer's assets, if they're so inclined.
"These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders," RadioShack CEO Joe Magnacca said in a statement to media.
The bankruptcy plan is subject to approval by the court but is expected to close within the next few months. ®