Case BLS Doc 1222 Filed 03/17/15 Page 1 of 12 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case BLS Doc 1222 Filed 03/17/15 Page 1 of 12 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Chapter 11 RADIOSHACK COROPORATION 1, et al, Case No (BLS) Jointly Administered Debtors Hearing Date March 19, 900 a.m. Objection Deadline February 25, 400 p.m. THE ACTING UNITED STATES TRUSTEE S OBJECTION TO THE APPLICATION FOR AN ORDER AUTHORIZING (I) THE DEBTORS TO RETAIN MAEVA GROUP, LLC AS FINANCIAL ADVISORS NUNC PRO TUNC TO THE PETITION DATE AND (II) A WAIVER OF CERTAIN REPORTING REQUIREMENTS PURSUANT TO LOCAL RULE (h) (D.I. 274) Andrew R. Vara, the Acting United States Trustee for Region 3 ( U. S. Trustee ), by and through his undersigned counsel, hereby files this Objection to the Application for an Order Authorizing (I) the Debtors to Retain MAEVA Group, LLC as Financial Advisors Nunc Pro Tunc to the Petition Date and (II) a Waiver of Certain Reporting Requirements Pursuant to Local Rule (h) (the Application ) 2 and in support thereof states as follows INTRODUCTION 1. This Court has jurisdiction to hear the above-referenced Objection. 1 The Debtors are the following eighteen entities (the last four digits of their respective taxpayer identification numbers follow in parentheses) RadioShack Corporation (7710); Atlantic Retail Ventures, Inc. (6816); Ignition L.P. (3231); ITC Services, Inc. (1930); Merchandising Support Services, Inc. (4887); RadioShack Customer Service LLC (8866); RadioShack Global Sourcing Corporation (0233); RadioShack Global Sourcing Limited Partnership (8723); RadioShack Global Sourcing, Inc. (3960); RS Ig Holdings Incorporated (8924); RSIgnite, LLC (0543); SCK, Inc. (9220); Tandy Finance Corporation (5470); Tandy Holdings, Inc. (1789); Tandy International Corporation (9940); TE Electronics LP (9965); Trade and Save LLC (3850); and TRS Quality, Inc. (5417). The address of each of the Debtors is 300 RadioShack Circle, Fort Worth, Texas Capitalized terms set forth in this objection are the same as those ascribed to capitalized terms as set forth in the so-referenced relevant pleading.

2 Case BLS Doc 1222 Filed 03/17/15 Page 2 of Pursuant to 28 U.S.C. 586, the U. S. Trustee is charged with the administrative oversight of cases commenced pursuant to title 11 of the United States Bankruptcy Code. This duty is part of the U. S. Trustee s overarching responsibility to enforce the bankruptcy laws as written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, (3d Cir. 1994) (the U. S. Trustee has public interest standing under 11 U.S.C. 307, which goes beyond mere pecuniary interest). 3. Pursuant to 11 U.S.C. 307, the U. S. Trustee has standing to be heard with regard to the above-referenced Objection. BACKGROUND AND RELEVANT FACTS 4. On February 5, 2015, RadioShack Corporation, and certain of its subsidiaries and affiliates, (the Debtors or the Company ) each filed voluntary Chapter 11 petitions. 5. On February 13, 2015, the U. S. Trustee appointed a statutory committee of unsecured creditors (the Committee ). 6. On February 15, 2015, the Debtors filed the Application as well as an Application to Employ and Retain Lazard Freres & Co. LLC and Lazard Middle Market LLC as the Debtors Investment Banker (D.I. 266) and the Application to Employ and Retain FTI Consulting, Inc. as Interim Management Service Providers (D.I. 267). 7. In the Application, MAEVA states that it was hired in October 2014 to assist the Debtors in developing a global restructuring and sale strategy and that MAEVA and the Debtors entered into an Engagement Letter, the terms of which govern the Debtors retention of MAEVA

3 Case BLS Doc 1222 Filed 03/17/15 Page 3 of 12 except as may be otherwise set forth in any order granting the Application. Application at 6 and Under this engagement, MAEVA is to be paid both a (i) a monthly fee of $500,000 (the Retainer Fee ) as well as a (ii) $3.25 million transaction fee (the Completion Fee ) contingent upon, and payable in cash within five business days after the consummation of a going-concern sale of not less than 1,500 store locations which includes the entry by the purchaser of such assets (the Purchaser ) into an alliance with Sprint Corporation pursuant to which a majority of the stores purchased by the Purchaser will be co-branded for the sale by Sprint in a store-within-a-store format of mobile devices that operate on the Sprint wireless network. Application at In support of the Application, the Debtors submitted the Declaration of Michael Cole, MAEVA s president (the Cole Declaration ). In his declaration, Mr. Cole states that MAEVA provided pre-petition advisory services to the Debtors and during the one-year period prior to the commencement of these cases for which pre-petition services MAEVA received $2,478, from the Debtors. Cole Declaration at Cole further states that MAEVA undertook a conflicts check to determine whether it had any conflicts or other relationships that might cause it not to be disinterested or to hold or represent an interest adverse to the Debtors and that MAEVA reviewed its connections with certain individuals and entities that may be parties in interest in these chapter 11 cases that were reasonably made known to MAEVA by the Debtors. Cole Declaration at 13. In particular, Cole identifies and discloses connections with Potential Parties in Interest such as where MAEVA (i) represented a company in a transaction in which BlueCrest, Saba and Taconic

4 Case BLS Doc 1222 Filed 03/17/15 Page 4 of 12 entities purchased shares in such company, (ii) has commercial banking relationships with JPMorgan Chase & Co, (iii) a principal of MAEVA has a current partnership with certain Taconic entities regarding a current investment in General Motors, (iv) and other connections with respect to MAEVA none of which, to the best of Cole s knowledge and belief, creates interests adverse to the Debtors. Cole Declaration at On February 25, 2015, the SCP Lenders filed an Omnibus Objection to the Debtors Applications to retain, among others, MAEVA (D.I. 560). On February 27, 2015, the Committee filed its Objection to the MAEVA Application (D.I. 685). 12. Based upon review of the Cole Declaration, U.S. Trustee s counsel inquired further into MAEVA s disclosures including requesting additional information be provided with respect to MAEVA s connections to Taconic, BlueCrest and Saba as referenced in the Cole Declaration. Thereafter on March 3, 2015, the Debtors filed the Supplemental Declaration of Michael Cole in Support of the Application (D.I. 774). 13. In furtherance of the Committee s objection, Mr. Cole was deposed by Committee counsel on March 11, (the Cole Deposition ). 14. At the Cole Deposition. Mr. Cole was presented with and questioned about two specific documents. The first document was an Advisory Agreement entered into and made effective October 17, 2014 (the MAEVA Advisory Agreement ) between RadioShack Corporation and MAEVA as well as a subsequent engagement agreement entered into among the same parties sometime in November 2014 (the MAEVA November Agreement ). 15. Under the MAEVA Advisory Agreement, (i) Harry Wilson was to serve as the Chief Restructuring Officer, (ii) Michael Cole was to serve as a Company Director, and (iii)

5 Case BLS Doc 1222 Filed 03/17/15 Page 5 of 12 other MAEVA employees and affiliates would serve as the Company s temporary staff in support of Wilson as CRO. See the preamble to the MAEVA Advisory Agreement. 16. In addition, under the MAEVA Advisory Agreement, General Retail Holdings ( GRH ) agreed to compensate MAEVA for certain services provided to the Company. MAEVA Advisory Agreement at 10. Specifically, GRH (identified in the MAEVA Advisory Agreement as an investor in the Company ) agreed to further compensate MAEVA for services provided to the Company. MAEVA agreed to communicate directly with GRH and any professionals retained by GRH and also agreed and confirmed that both the CRO and Director have, in such capacities, fiduciary duties to the Company and that the anticipated communications between MAEVA personnel and GRH and its professionals did not violate such duties or represent a conflict of interest for MAEVA or the MAEVA Personnel. MAEVA and the Company stated that they were aware of no other potential conflicts in connection with this engagement. MAEVA Advisory Agreement at Under the MAEVA November Agreement, Harry Wilson and Michael Cole were slated to become the Debtors Co-Chair Revitalization Officers and MAEVAs compensation would also include rights to the Company s preferred stock. MAEVA November Agreement at 10, Schedule B. 18. As set forth in the February 5, 2015, Declaration of Carlin Adrianopoli in Support of First Day Pleadings (D.I. 17) (the First Day Declaration ), Mr. Adrianopoli identified GRH s connections to the Debtors and other parties in these cases as follows a. On October 3, 2014, the lenders under the 2013 Credit Agreement sold all their interests therein to GRH and General Retail Funding LLC ( GRF ). First Day Declaration at 26.

6 Case BLS Doc 1222 Filed 03/17/15 Page 6 of 12 b. It is his understanding that GRH s general partner is an affiliate of Standard General LP ( Standard General ). First Day Declaration at 26. c. GRF is GRH's finance subsidiary and is managed by another Standard General affiliate. Id. d. Litespeed Master Fund, a fund sponsored by Litespeed Management LLC and not connected to Standard General, is a limited partner of GRH. Id. e. GRH does not own as RadioShack common stock, but that as of November 26, 2014, Standard General held approximately 10 million shares while Litespeed Master Fund owned approximately 9 million shares. First Day Declaration at 27. f. On the date that GRH and GRF, affiliates of Standard General, purchased the interests of the then-existing lenders under the 2013 Credit Agreement and entered into the First Amendment to the 2013 Credit Agreement with the Company, the Company also entered into a Recapitalization and Investment Agreement with GRH, which provided for a rights offering to RadioShack s shareholders and the issuance of equity to GRH, primarily in exchange for the right to receive $120 million of cash collateral posted by GRH to secure letters of credit issued under the 2013 Credit Agreement which rights offering and the equity conversion were scheduled to occur in the first quarter of 2015 provided that certain conditions were satisfied but which conditions were ultimately not met. First Day Declaration at Despite the fact that Standard General LP, General Retail Funding LLC (Standard General), General Retail Holdings LP and Litespeed Management LLC were among the Potential Parties in Interest that MAEVA reviewed for connections (See Cole Declaration at 13, Schedule I), there was no disclosure of MAEVA s connections to GRH as outlined in paragraphs 14 through 18 above and as otherwise gleaned from the Cole Deposition, the MAEVA Advisory Agreement and the MAEVA November Agreement.

7 Case BLS Doc 1222 Filed 03/17/15 Page 7 of 12 LAW AND ANALYSIS 20. MAEVA failed to make a proper, timely and effective disclosure of its connections to GRH, Standard General and other significant parties-in-interest in these cases and MAEVA should be disqualified from employment. 21. Fed. R. Bankr. P provides that Fed. R. Bankr. P An order approving the employment of attorneys, accountants, appraisers, auctioneers, agents, or other professionals pursuant to 327, 1103, or 1114 of the Code shall be made only on application of the trustee or committee. The application shall be filed and, unless the case is a chapter 9 municipality case, a copy of the application shall be transmitted by the applicant to the United States trustee. The application shall state the specific facts showing the necessity for the employment, the name of the person to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and, to the best of the applicant s knowledge, all of the person's connections with the debtor, creditors, any other party m interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. The application shall be accompanied by a verified statement of the person to be employed setting forth the person s connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. 22. Under Fed. R. Bankr. P. 2014(a), a professional seeking to be employed pursuant to Sections 327, 1103 or 1114 of the Bankruptcy Code must disclose certain relationships The application shall be accompanied by a verified statement of the person to be employed setting forth the person s connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the

8 Case BLS Doc 1222 Filed 03/17/15 Page 8 of 12 office of the United States trustee. Under Del. Bankr. LR (a), the duty of disclosure imposed by Rule 2014(a) is a continuing duty. 23. More importantly, Section 328(c) of the Bankruptcy Code provides a tool for enforcement of the continuing duty of disclosure. Thus, in In re Leslie Fay Companies, 175 B.R. 525 (Bankr. S.D.N.Y. 1994), where the debtor s counsel failed to disclose to the court its ongoing representation of the Audit Committee and its members, the court reduced counsel s compensation, holding that 175 B.R. at 533. All facts that may have any bearing on the disinterestedness of a professional must be disclosed. Consistent with the duty placed on the professional, it is the responsibility of the professional, not of the court, to make sure that all relevant connections have been brought to light. [citations omitted]. So important is the duty of disclosure that the failure to disclose relevant connections is an independent basis for the disallowance of fees or even disqualification. [citations omitted]. 24. The court and parties-in-interest police conflicts through mandatory disclosure of relationships under Fed. R. Bankr. P. 2014(a). The scope of disclosure is broader than the question of disqualification; the applicant and the professional must disclose, without exception, all connections and not merely those that rise to the level of conflicts. In re Granite Partners, L.P., 219 B.R. 22, 35 (Bankr. S.D.N.Y. 1998). 25. Disclosure goes to the heart of the integrity of the bankruptcy system. In re etoys, Inc., 331 B.R. 176, 189 (Bankr. D. Del. 2005), quoting In re B.E.S. Concrete Prods., Inc., 93 B.R. 228, 236 (Bankr. E.D. Cal. 1988).

9 Case BLS Doc 1222 Filed 03/17/15 Page 9 of In In re Enron Corp., 2003 WL (S.D.N.Y. 2003), the court observed The purpose of Rule 2014(a) is to provide the court and the United States trustee with information to determine whether the professional s employment is in the best interests of the estate. For that reason, the duty of disclosure is not merely critical, it is sacrosanct. etoys, supra, 331 B.R. at The professional must disclose all connections; he may not pick and choose which connections to disclose and which to ignore as unimportant or trivial. In re Jore Corporation, 2003 WL , *20 (Bankr. D. Mont. July 28, 2003). The reason is simple [t]he decision as to what facts may be relevant should not be left up to the professional, whose judgment may be clouded by the benefits of potential employment. In re Fibermark, Inc., 2006 WL at *8 (Bankr. D. Vt. March 11, 2006), quoting In re Lee, 94 B.R. 172, 177 (Bankr. C.D. Cal. 1988). The professional may not leave the court or other parties-in-interest to search the record for such relationships or otherwise to ferret them out. In re BH & P, Inc., 949 F.2d 1300, (3d Cir. 1991). 28. Disclosure must be complete; the professional cannot coyly provide some information while withholding the true nature of the potential or actual conflict. See, In re BH&P, Inc., 119 B.R. 35, 44 (D. N. J. 1990), Aff d, 949 F.2d 1300 (3d Cir. 1991) (duty to disclose requires maximum disclosure ) (quoting In re Glenn Electric Sales Corp., 99 B.R. 596, 600 (D. N. J. 1988)). It is the responsibility and duty of the professional, however, and not the court, to make sure all connections have been disclosed. Leslie Fay Companies, 175 B.R. at 533. Absent the spontaneous, timely and complete disclosure required by section 327(a) and

10 Case BLS Doc 1222 Filed 03/17/15 Page 10 of 12 Fed. R. Bankr. P. 2014(a), court appointed counsel proceed at their own risk. Rome v. Braunstein, 19 F.3d 54, 59 (1 st Cir. 1994). 29. The purpose behind Rule 2014(a) is to ensure that all facts relevant to a party s professional qualification are before the court so the bankruptcy court can determine whether the connections disqualify the applicant or if further inquiry into the matter is required. The professional's duty to disclose is self-policing. Granite Partners, 219 B.R. at 35. It is not the duty of the court, the U.S. Trustee or any other party to search beyond the Rule 2014(a) disclosures for the existence of connections that a professional seeking to be employed should have disclosed. Full disclosure of any and all connections to a creditor or other party-in-interest is the affirmative duty of the professional seeking employment. The duty to disclose all possible connections is so vital to the bankruptcy process that failure to do so is an independent basis for the disallowance of fees. See In the Matter of Roger J. Au & Son, Inc., 71 B.R. 238, 252 (Bankr. N.D. Ohio 1986); In re Tinley Plaza Associates, L.P., 142 B.R. 272, 278 (Bankr. N.D. Ill.1992). 30. In the instant cases, despite specific knowledge to the contrary, MAEVA failed to disclose its connections and pre-petition relationship with GRH and Standard General as well as its role vis-à-vis these parties. 31. The connections to GRH and Standard General were central to the Company s and MAEVA s pre-petition restructuring efforts. These connections were not incidental, but were the result of, among other things, MAEVA s own efforts to secure payment for its services both pre-petition and post-petition. 32. As Mr. Cole testified at his March 11 th deposition, MAEVA s agreement with GRH was made in order to compensate MAEVA for orchestrating an equity rights offering

11 Case BLS Doc 1222 Filed 03/17/15 Page 11 of 12 involving GRH, Standard General and several others. Cole Tr Moreover, if the rights offering had occurred as contemplated it would have resulted in excess of $3.0 million in fees for MAEVA. Cole Tr , 40, In addition, the failure of MAEVA to disclose the fact that Mr. Wilson was tapped as the Company s CRO while Mr. Cole was to become a Company Director goes directly to MAEVA s disinterestedness under Section 327(a) and 101(14)(B) of the Bankruptcy Code. Accordingly, MAEVA should be disqualified from estate employment in these cases. 34. The U. S. Trustee reserves any and all of his rights, remedies and obligations found at law, equity or otherwise, including, inter alia, the right to complement, supplement, augment, alter, substitute and/or modify this Objection, to file an appropriate motion, complaint or action, or to take any further action as may be required or to conduct any and all discovery as may be deemed necessary or as may be required and to assert such other grounds as may become apparent. THIS SPACE LEFT BLANK INTENTIONALLY

12 Case BLS Doc 1222 Filed 03/17/15 Page 12 of 12 WHEREFORE, for all the above-stated reasons, the Acting United States Trustee respectfully requests that Court deny the Application. However, if the Court does grant the Application, the Acting United States Trustee respectfully requests that MAEVA disgorge any and all fees that it may have otherwise been entitled to date, forego any Completion Fee or other transactional fees based on MAEVA s failure to properly and timely make full and proper disclosure of its connections in these cases as required under applicable bankruptcy law and the rules of this Court and/or grant such other relief as this Court deems appropriate, fair and just. Respectfully submitted, ANDREW R. VARA ACTING UNITED STATES TRUSTEE Dated March 17, 2015 By /s/richard L. Schepacarter Richard L. Schepacarter Trial Attorney United States Department of Justice Office of the United States Trustee J. Caleb Boggs Federal Building 844 King Street, Suite 2207, Lockbox 35 Wilmington, DE (302) (302) fax Richard.Schepacarter@usdoj.gov

13 Case BLS Doc Filed 03/17/15 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE x Chapter 11 In re RADIOSHACK CORPORATION, et al., Debtors. Case No (BLS) Jointly Administered Re D.I X Hearing Date March 19, 2015, at 900 a.m. Obj. Deadline February 25, 2015 at 400 p.m. CERTIFICATE OF SERVICE I certify that on March 17, 2015, I caused to be served a copy of The Acting United States Trustee s Objection to the Application for an Order Authorizing (I) the Debtors to Retain MAEVA Group, LLC as Financial Advisors Nunc Pro Tunc to the Petition Date and (II) a Waiver of Certain Reporting Requirements Pursuant to Local Rule (h) (D.I. 274), via and/or regular mail upon the following persons David M. Fournier, Esquire Evelyn J. Meltzer, Esquire Pepper Hamilton LLP 1313 N. Market Street Wilmington, Delaware FournierD@pepperlaw.com MeltzerE@pepperlaw.com David G. Heiman, Esquire Jones Day 901 Lakeside Avenue Cleveland, Ohio dgheiman@jonesday.com Gregory M. Gordon, Esquire Jonathan M. Fisher, Esquire Jones Day 2727 N. Harwood Street Dallas, Texas gmgordon@jonesday.com jmfisher@jonesday.com Thomas A. Howley, Esquire Paul M. Green, Esquire Jones Day 717 Texas Suite 3300 Houston, Texas tahowley@jonesday.com pmgreen@jonesday.com Richard Hahn, Esquire Debevoise & Plimpton LLP 919 Third Avenue New York, New York rfhahn@debevoise.com Gregory Werkhesier, Esquire Morris, Nichols, Arsht & Tunnell LLP 1201 N. Market St., 16th Floor Wilmington, Delaware gwerkheiser@mnat.com

14 Case BLS Doc Filed 03/17/15 Page 2 of 2 Gregg Galardi, Esquire DLA Piper, LLP 1251 Avenue of the Americas New York, New York gregg.galardi@dlapiper.com Cathy Hershcopf, Esquire Seth Van Aalten, Esquire Cooley LLP 1114 Avenue of Americas New York, NY chershcopf@cooley.com svanaalten@cooley.com Christopher Samis, Esquire Whiteford, Taylor & Preston The Renaissance Centre 405 North King Street, Suite 500 Wilmington, Delaware csamis@wtplaw.com Susheel Kirpalani, Esquire Quinn Emanuel Urquhart & Sullivan, LLP 51 Madison Avenue, 22 nd Floor New York, NY Susheelkirpalani@QuinnEmanuel.com Adam G. Landis, Esquire Kerri K. Mumford, Esquire Landis, Rath & Cobb 919 North Market Street, Suite 1800 Wilmington, Delaware landis@lrclaw.com mumford@lrclaw.com Adam C. Harris, Esquire David M. Hillman, Esquire Brian C. Tong, Esquire Schulte Roth & Zabel LLP 919 Third Avenue New York, New York adam.harris@srz.com david.hillman@srz.com brian.tong@srz.com C. Barr Flinn, Esquire Kenneth J. Enos, Esquire Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, Delaware bflinn@ycst.com kenos@ycst.com Norman L. Pernick, Esquire Cole Shotz, P.C. 500 Delaware Avenue, Suite 1410 Wilmington, DE npernick@coleschotz.com Michael G. Burke, Esquire Brian J. Lohan, Esquire Sidley Austin 787 Seventh Avenue New York, NY mgburke@sidley.com blohan@sidley.com William P. Bowden, Esquire Leigh-Anne M. Raport, Esquire Ashby & Geddes, P.A. 500 Delaware Avenue Wilmington DE wbowden@ashby-geddes.com lraport@ashby-geddes.com /s/richard L. Schepacarter Richard L. Schepacarter Trial Attorney