A truce has been called in the battling between Inner City Media Corporation (ICMC) and its senior creditors, who had filed to put ICMC into involuntary Chapter 11 bankruptcy. Yes, the company will go into Chapter 11, but it will be as a voluntary filing.
Under the agreement revealed in a hearing before US Bankruptcy Judge Shelley Chapman on Wednesday (8/31), the creditors have agreed to put their petition on hold, with ICMC to file its own voluntary Chapter 11 petition no later than next Wednesday (9/7). The creditors’ request for a trustee to oversee ICMC will not be heard by the court until the end of September at the earliest.
While waiting for ICMC to file its Chapter 11 petition it will abide by the budget submitted with its response to the creditors’ attempt to impose severe restrictions on the use of its cash. The budget was amended slightly to restrict, but not eliminate, payments to its new financial advisor.
ICMC Chairman Pepe Sutton will continue to be paid under the terms of his contract and the effort by lawyers for the creditors to depose Sutton, which had been set for August 30th, has been put on indefinite hold.
Neither Inner City nor the creditors would comment on the proceedings, but the terms of the agreement were spelled out in the transcript of Wednesday’s hearing.
In anticipation of the filing of a Chapter 11 petition by ICMC no later than September 7, Judge Chapman has set a hearing on “first day” motions for Friday, September 9th.