The senior loan holders who filed to put Inner City Media Corporation (ICMC) into involuntary Chapter 11 have followed up with a motion to limit ICMC’s use of its cash. As with the previous filing, the creditors lashed out at ICMC Chairman Pepe Sutton.
“So long as Mr. Sutton remains in a position of power over the Alleged Debtors, the Senior Lenders’ interests in the Alleged Debtors are imperiled. Indeed, presumably at Mr. Sutton’s direction, counsel for the Alleged Debtors went to far as to threaten to file chapter 7 petitions and take actions before the Federal Communications Commission (FCC) that would jeopardize the Alleged Debtors’ broadcast licenses, likely their most valuable asset. These actions show a serious and outright disregard for the best interests of the Alleged Debtors, their estates and their creditors,” said the motion seeking restrictions on how ICMC and its various subsidiaries spend cash.
The creditors accused Sutton of wasting millions of dollars by firing or forcing out the law firm and financial advisor which had been helping the board of directors negotiate a pre-packaged, voluntary Chapter 11 filing and replacing them with new firms which have also been paid hefty fees.
Among other things, the motion seeks to block any payment for salary, life insurance or other fringe benefits for Sutton “until it can be determined whether Mr. Sutton’s extremely high compensation is justifiable.” The creditors say in their filing that they do not want to restrict the broadcaster’s ability to conduct normal business, but want to limit the use of cash to benefit ICMC shareholders, executives and advisors.
In response to a motion filed by the creditors, US Bankruptcy Judge Shelley Chapman has shortened the time for ICMC to respond to the motion which would restrict how the company’s cash is used and set a hearing for August 31st.
ICMC has not filed a response to the Chapter 11 petition or any of the motions (now due by August 30), but did issue a statement that it is trying to negotiate a settlement with the creditors.