Thursday was a busy day in a Houston U.S. Bankruptcy Court for the nation’s top owner of radio stations. Judge Marvin Isgur approved the disclosures and solicitation materials for iHeartMedia’s Chapter 11 plan. A Confirmation Hearing Date is set for Dec. 11.
Isgur’s release of his 437-page order came with iHeartMedia’s formal submission of its fourth amended Chapter 11 plan.
The actions taken Thursday bring iHeart one step closer to emerging from debtor-in-possession status.
The Fourth Amended Joint Chapter 11 Plan of Reorganization contains much legal language that codifies iHeart’s map for fiscal recovery — one that saw the September 5 filing of an 11-page objection by the Securities and Exchange Commission.
The issue with the SEC was iHeart’s disclosure statement relating to the now-reworked “third amended joint Chapter 11” reorganization plan. The problem, as the SEC sees it, pertained to “an extensive list of non-debtor third parties.” Specifically, the third amended plan for iHeart to emerge from debtor-in-possession status contained “provisions that release, exculpate, and discharge the liability of an extensive list of non-debtor third parties.”
This group of debtors has proved to be a thorn in iHeart’s side. As the SEC argues, the plan failed to provide an opportunity for claim and interest holders subject to these provisions to consent to such releases in contravention of Section 524(e) of the Bankruptcy Code and controlling law in the Fifth Circuit.
SEC also believed that iHeart’s disclosure statement “lacks adequate information, as required under Section 1125(b) of the Bankruptcy Code, to support the release, exculpation, and permanent injunction provisions.”
So, San Antonio-based iHeart drafted the fourth plan, and this on Thursday (9/20) passed muster with Isgur.
On March 14, 2018, iHeart filed for voluntary Chapter 11 reorganization in the Houston Bankruptcy Court. The Plan and Disclosure Statement were subsequently filed on April 28, with subsequent modifications on June 21, August 23 and August 28.
The Plan, as it stands today, proposes to exchange approximately $16 billion in liabilities for new notes and new equity of the reorganized iHeartMedia. It also calls for the separation of Clear Channel Outdoor Holdings and iHeartMedia, and that creditors will receive “various combinations of new equity, new debt, cash, 100% of iHeartMedia’s equity interest in CCOH, and all excess cash. Further, equity holders will receive 1% of new equity.
With Isgur’s declaration that the reworked iHeart disclosure statement gives claimholders “adequate information to make an informed decision as to whether to vote to accept or reject the Plan,” the road to erasing some $10 billion in debt can be paved.
Isgur set several key deadlines in his approval of the disclosure statement.
A “Service of Interrogatories and Document Requests” deadline is today (9/21).
A voting deadline is Nov. 9 at 5pm Central.
But, the most important date may be the Confirmation Hearing Date of Dec. 11, at 9am Central.
Following this hearing, iHeart may finally be on the road that Cumulus Media has already taken — one free from high leverage caused by the purchase of radio station after radio station and a 2008 leveraged buyout led by Boston-based firms Bain Capital Partners and Thomas H. Lee Partners.