The Chapter 7 bankruptcy trustee for Interep filed dozens of claims in the past two weeks, seeking cash from broadcasters who were once clients of the rep firm. In some cases, the amounts sought are substantial.
The trustee alleges that broadcasters formerly repped by Interep failed to pay commissions due for national ad sales in the company’s final days. Also, the trustee is seeking the return of payments made by Interep to various vendors and payments to stations (apparently relating to its unwired networks) in the 90 days leading up to the company’s Chapter 11 filing on March 30, 2008, arguing that the company was already insolvent and those funds rightfully belong to the bankruptcy estate.
Far and away the biggest claim is against Entercom. The trustee claims that the company has refused to pay past due commissions totaling $64,560.40. But beyond that, the trustee wants Entercom to return $6,351,719.69 that was paid by Interep to Entercom and various subsidiaries in the 90-day period leading up to the Chapter 11 filing.
But an even larger claim could yet be coming. CBS Radio, which had been Interep’s largest client, has filed a joint stipulation with the trustee setting May 31st as the end of a “tolling period” which would extend any deadlines for the trustee to assert claims while he and CBS try to come to a settlement. Otherwise, he is expected to commence legal action against CBS.
The complaints already filed with the bankruptcy court include a long list of former Interep clients. The trustee is seeking $83,523.79 in past due commissions from Beasley Broadcast Group, another large Interep client, along with $2,378,441.71 that was paid to Beasley and its subsidiaries during the 90-day window.
Most of the other complaints against broadcasters seek tens of thousands of dollars or hundreds of thousands, but the numbers add up into the millions because the list of former clients is so long. For example, a little over a half million is sought from Jerry Lee’s WBEB-FM Philadelphia, while the complaint against Berkshire Broadcasting Corp., licensee of three stations in the Danbury, CT market, is for less than $40K.
The long list includes such names as Mapleton Communications, Uno Radio Group, Cherry Creek Radio, Southern Communications, Crawford Broadcasting, Chapin enterprises, Lotus Communications, Chicago Educational TV (owner of commercial WFMT-FM), Glory Communications, Brewer Communications, Pamal Broadcasting…and the list goes on and on.
You can bet that some of the broadcasters will argue that the applicable date is not March 30, 2008, but rather October 24, 2008, when the Chapter 11 case was converted to Chapter 7 liquidation.
In addition to the station clients, the trustee is seeking reimbursements from a range of vendors for payments received during the 90-day period, including several telephone companies, a little over $40K paid to Arbitron, $426K paid to the Nasdaq Stock Market, over $13K paid to Radio Ink magazine and five payments totaling nearly $788K to Random House. There was no explanation what those payments to the book publisher were for.
So, how much has the bankruptcy trustee recovered to pay back the more than $100 million in debt that Interep owed when it shut down? A report to the court on March 22 stated that the trustee had recovered $32,519,779.87 and disbursed $26,621, 964.75 (to the creditors and to pay expenses), leaving the estate with a cash balance on hand of $5,897,815.12.
And while Interep hasn’t been in business since October 2008, don’t look for its bankruptcy case to be wrapped up anytime soon. The trustee told the court he doesn’t expect the case to be resolved before the end of 2011.