RadioShack Sells Customer Data After Settling With States

RadioShack Corp. won court approval to sell data on about 67 million customers in a $26.2 million deal for assets that also includes the bankrupt electronics retailer’s name.

U.S. Bankruptcy Judge Brendan Shannon in Wilmington, Delaware, approved the sale to hedge fund Standard General LP Wednesday, after almost 40 states, led by Texas, reached an agreement with the chain and the buyer limiting the use of the shopper data.

The states had expressed concern about how Standard General might use the information. The hedge fund has also taken over about 1,700 RadioShack locations with a plan to run them in a co-branding arrangement with Sprint Corp.

The agreement was reached May 14 and announced in court Wednesday. At least 50 million customer files will be destroyed, according to a statement from New York Attorney General Eric Schneiderman. The new owner won’t have access to credit-card data, Social Security numbers, dates of birth or phone numbers.

E-Mail Addresses

Standard General can keep e-mail addresses supplied by customers seeking product information in the past two years, but people will be able to opt out before that information is transferred to the new owner. Standard General won’t be allowed to share any of the data, including with Sprint.

“This settlement is a victory for consumer privacy nationwide,” Texas Attorney General Ken Paxton said in a statement. “The fact that 38 states joined together in this case reflects a growing understanding of the importance of safeguarding customer information.”

The asset sale was approved over the objection of Wonderland Investment Group Inc., which wanted the auction reopened so it could submit a $30 million bid. Wonderland said a change from incremental bidding to sealed bids wasn’t provided for under the approved bidding procedures.

Fort Worth, Texas-based RadioShack, founded in 1921, is being dismantled in bankruptcy after struggling to compete with big-box retailers and online merchants.

In addition to its name and the stores that Standard General bought, the company has also sold leases and non-U.S. intellectual property rights.

RadioShack lawyers said Wednesday that there are opening bidders in place for real estate that goes on the block June 11.

The company plans to file a reorganization plan by the end of this week and expects to have it confirmed by the end of June, a lawyer for RadioShack told the judge.

The case is In re RadioShack Corp., 15-10197, U.S. Bankruptcy Court, District of Delaware (Wilmington).