On April 10, the Burbank, Calif.-based multimedia company founded by the Liberman family found itself smack dab in the middle of a fight with junior noteholders regarding its desire to extend the approval period for its plan to emerge from Chapter 11 bankruptcy protection.
Now, LBI Media appears to have run out of time. On Thursday morning, a confirmation hearing will be conducted in a Delaware federal bankruptcy court.
The hearing on confirmation of the Third Amended Joint Chapter 11 Plan of Reorganization of LBI Media and its affiliated debtors will be held at 10am Eastern on April 17.
It was originally scheduled for Wednesday morning but was rescheduled.
Why? It is not stated in the notice distributed from the office of Chief U.S. Bankruptcy Judge Christopher Sontchi, in Wilmington, Del.
Serving as the legal counsel for LBI Media are attorneys from Wilmington-based Richards, Layton & Finger P.A. and New York-based Weil Gotshal & Manges LLP.
The 24-hour delay, declared Monday by the court, follows a busy Friday for LBI Media in Sontchi’s court, highlighted by the company’s filing of its 213-page third amended joint Chapter 11 reorganization plan.
Included in this filing is an exit facility credit agreement term sheet that involves a secured term loan of $180 million with HPS Investment Partners as the administrative agent.
The Thursday hearing will also likely feature a contested matter that has generated much focus in recent weeks. This is the January 15 motion of the Plaintiff Group of Noteholders for Entry of an Order Granting Leave, Standing and Authority to Commence and Prosecute Certain Claims on Behalf of the LBI Media Estate and Exclusive Settlement Authority in Respect of Such Claims.
Translation: The junior noteholders who refer to themselves as “the rightful economic owners of LBI” are still very much putting up a fight and will likely not make the plan’s confirmation an easy task.
In fact, they may wish to liquidate LBI’s assets, rather than allow Lenard Liberman, co-founder and CEO, retain any attributable interest in the family operation. That’s because, as the junior noteholders have been arguing, the HPS deal stinks of fraud.
Importantly, the junior noteholders would get zero equity in a reconstituted LBI Media, with HPS getting most of the ownership.