A federal bankruptcy judge Monday gave tentative approval to a plan for Citadel Broadcasting to reorganize its finances and emerge from Chapter 11 bankruptcy. The plan now moves to creditors for a vote on accepting the terms.
In approving the company’s reorganization plan, which included some newly improved terms for unsecured creditors, the judge rejected the objections of some large shareholders, who had claimed that they were being unfairly shut out of any equity value, due to the company’s improving financial condition.
According to Bloomberg, the judge said the shareholders could raise their objections at a hearing to confirm the reorganization plan, which is set for May 12.
RBR-TVBR observation: The bottom line is that the secured lenders are always first in line, so the senior lenders, led by JPMorgan Chase, are going to own Citadel, with some shares set aside for grants to the management team going forward. The time for the disgruntled shareholders to take action and try to preserve their equity value was back well before the Chapter 11 filing in December.