Judge rules for Regent, against Trustee


Regent Communications is back on track for a quick trip through bankruptcy court. The judge ruled Monday that no vote by shareholders will be required on the company’s Chapter 11 reorganization plan.

The US Trustee for the Federal Bankruptcy Court in Delaware had argued in a filing last week that because current shareholders of Regent are receiving a payout of $5.5 million (about 12.8 cents per share), Regent was required to send each and every one of them a full disclosure statement regarding the Chapter 11 reorganization plan and have them vote on it.

Regent had insisted that the $5.5 million was a “gift” from the senior lenders, since the shareholders were not entitled to any recovery under the Bankruptcy Code and that collecting votes from the shareholders would be a waste of time and money. In fact, it warned that the delay could deplete the cash available to pay creditors, including the payout to shareholders. Regent said it has sufficient cash to fund a 40-45 day Chapter 11 confirmation process, but not one that could run 90 days or more.

US Bankruptcy Judge Kevin Gross on Monday (3/22) rejected the Trustee’s legal argument and ruled that the equity holders are “deemed to have rejected the Plan” and that Regent is not required to solicit their votes.

At the time when Regent filed its pre-packaged Chapter 11 bankruptcy petition, RBR-TVBR noted that Regent management “drove a hard bargain” with its senior lenders in getting any cash at all for shareholders. In other recent Chapter 11 proceedings by broadcasting companies, shareholders got absolutely zero. But even so, some shareholders had insisted that they should be getting more than 12.8 cents per share. They can still make that argument to the judge, but the bankruptcy court proceeding is not going to be delayed for a vote by the shareholders.

RBR-TVBR observation: Amazingly, logic has prevailed. Having shareholders vote, even though the outcome of their vote would not have mattered, didn’t seem to make much sense.