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How much money does @RadioShack owe maker companies? A lot… #makerbusiness

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A few years ago RadioShack contacted Adafruit in an effort to stock our products in their thousands of stores around the USA. This sounds like a dream come true but we decided to decline and focus on our online store and partners who could supply a retailer with Adafruit products.

February 5th, 2015 RadioShack filed for bankruptcy, we have some coverage here on our site about some of the details and store closing.

RadioShack Corporation (15-10197)

On February 5, 2015, RadioShack Corporation and 17 affiliated debtors (collectively, the “Debtors”) each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.  The Debtors’ cases are pending before the Honorable Brendan L. Shannon and are jointly administered under Case No. 15-10197.

From this page you can type in a company name in “Creditor Name” section and search for companies that are owed money, here are a few of the well-known maker companies and also, a larger company, Apple.

Seeed Studio is owed the most: $806,051.63
Maker Media (MAKE Magazine) is owed two amounts: $28,017.00 and $78,713.66, total of: $106,730.66
Magyc (Arduino) is owed: $105,235.15
Parallax is owed: $77,953.94
Velleman is owed: $31,002.00
littleBits is owed: $19,100.00
Afinia (3D printer company) is owed: $1,727.52

Looks like Apple is owed: $18,897.19, $5,164.00 and $14,523.00, for a total of: $38,584.19

RadioShack has paid some companies in the past, here is a list of suppliers and recent payments RadioShack has made (PDF).

Payments made to creditors within 90 days of commencement of this case:
Seeed: No payment indicated.
Magyc: No payment indicated.
Maker Media: $305,404.75 paid
Parallax: $62,661.79 paid
Velleman: $6,824.72 paid
littleBits: No payment indicated.
Afinia: No payment noted.

Apple was paid $3,309,900.00

What does this all mean? We’re guessing (so please chime in if you are an expert on this) – the smaller maker companies got the worst of this while a large company like Apple likely had contractual requirements to be paid immediately or sooner than the smaller companies, for Apple to be owed less than Parallax, Arduino, MAKE or Seeed is almost impossible to believe.

We are really reluctant to sell our products directly to retailers, the contracts are unfair towards a small company, it’s basically consignment and most of the time the buyer doesn’t actually care, you’re just part of a spreadsheet somewhere.

Post up in the comments if we missed something of you have some insights to help others.


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5 Comments

  1. Kind of sad that RS is closing. Without them and others like Heathkit, I wonder how we’d be different. Good call on not getting in bed with them. Love Adafruit and want you guys to continue to do well and do good things.

  2. If this was the sale of a company, buyers and sellers protect themselves by exchanging shares of stock. In other words, if the buyer of the company pays $10,000, shares of stock could change hands until all of the money is paid back.

    I’ve been to companies that don’t let us pick up product unless there has been a credit check done and Radio Shack has been in the news for not doing very well and the other rule of business is not to give credit to whom credit is due. The fact they were doing poorly means that they didn’t have the ability to always pay.

    I think if large companies want product on consignment, you should ask to hold shares of non-voting stock or bonds as collateral.

    The company I work for doesn’t sell to individuals anymore because the company I work for doesn’t trust them and they don’t pay their bills.

    If you are a working man or woman, read the book I had to read in business college: "Seize the Day" by Saul Bellow.

    http://en.wikipedia.org/wiki/Seize_the_Day_%28novel%29

    The moral of the story is that if you are entering business now, get what you can because tomorrow the business owner takes away the salesman’s business route that the salesman created.

    This problem is why companies have lawyers.

  3. Thank you for avoiding bad contracts with retailers.
    Yes, they can drive small companies (less than $500 million) out of business.
    I would rather buy from the online store for the same/cheaper price than at some retailer.
    Having to wait the extra couple of days for shipment is much better than having to pay gov’t tax and risk the small company going out of business.

  4. They can and will put a small supplier on 120 Days minimum payment. If you are not careful the PO will allow them to copy your product. I am surprised that SEEED studio’s did not have a Letter of Credit from Radio Shack for this contingency. If so this would not show on a payment analysis.

    Most of the time business with China is done on LC’s because of the lack of Enforcement in the US/China of commercial contracts.

  5. The issue is always the same with huge distributors. They can distribute your products to lot more people than you could, for this, they ask for higher discounts and payment delays. As I tell my clients, we’re not a bank, if you want credits ask your bank, not your suppliers. But, most of the suppliers are afraid of losing large business shares and usually fall in this trap, I can understand that, but I’ve got more than 30 years of experience in sales business.
    Regarding the fact that Apple is paid before small furnishers, it’s because when these not reliable guys will create a new company (after a reasonable delay !) they want to be able to sell Apple products !
    That is quite cynical no ?

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