By Peg Brickley 

RadioShack won court approval of a lender takeover that will send the retailing operation out of bankruptcy trimmed-down, but still selling electronics.

Tuesday's decision from Judge Brendan Shannon clears the way for Standard General to save 1,743 stores and 7,500 jobs in a streamlined relaunch of the business.

An existing senior lender, Standard General offered more money than rivals, and was the only bidder to offer the "added and terribly important benefit of saving more than 7,000 jobs and preserving a century-old American retailing icon," the judge said in approving the sale.

Overtaken by newer retailers, the one-time electronics pioneer was weighed down with some 4,000 outlets and too much debt when it filed for Chapter 11 bankruptcy.

Standard General intends to operate most of the salvaged stores in an alliance with Sprint Corp. The arrangement is designed to draw mobile-phone shoppers to the electronics goods outlets without dragging on RadioShack's profits.

The ruling came hours before a deadline that could have tipped the sprawling chain into an all-out liquidation. RadioShack filed for bankruptcy protection Feb. 5, and immediately launched going-out-of-business sales at nearly 2,000 stores.

The plan was to try to save the rest, through a sale to lender Standard General LP, a hedge fund that took an interest in RadioShack last year. March 31 was a crucial date, as RadioShack didn't have the spare cash to cover April rent.

Valued at about $160 million, Standard General's offer was the best bid to come out of an auction last week where the new owner competed with liquidators and with Salus Capital Partners, another lender.

At times during four days of hearings in the U.S. Bankruptcy Court in Wilmington, Del., battles among RadioShack's senior lenders threatened to upset the Standard General proposal and consign the company to liquidators.

Hedge funds fretted they could be successfully sued over financial maneuvers last year, as RadioShack took a run at a holiday season turnaround. They pressured Standard General to bid with cash instead of by offering to cancel loans, but agreed to drop the demand to let the deal go through.

Salus said it was treated unfairly at the auction, and tried to block the Standard General transaction on the grounds it would damage the value of the brand. The judge rejected those arguments.

The "new" RadioShack only has temporary rights to use the name and certain patents as it gets back on its feet. After six months, unless Standard General comes up with more money, RadioShack may need a new name.

Rival bidder Salus has first claim on the RadioShack intellectual property, including the trademark, patents and customer lists. Owed $150 million, Salus will get only partial payment out of the sale to Standard General. The intellectual property may be sold separately, and it could be sold to Standard General. However, Salus is in active talks with other potential buyers RadioShack's intellectual property, advisers said in court action.

The sale means little or no money for landlords, suppliers and unsecured bondholders.

"Unfortunately, when it comes to unsecured creditors, there was nothing Standard General could provide from an economic perspective," said Susheel Kirpalani, lawyer for the official committee representing RadioShack's unsecured creditors.

To ensure the company-saving transaction made it through court, the unsecured creditors committee agreed to support it. Creditors that wound up on the bottom of RadioShack's pile of debt are counting mostly on potential litigation to cover what they are owed. Estimates are that RadioShack owes bondholders, suppliers and landlords about $500 million.

Write to Peg Brickley at peg.brickley@wsj.com

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