As RBR+TVBR first reported on Tuesday (1/16), a series of damaging claims from a group of second-lien noteholders displeased at actions taken by LBI Media that involve HPS Investment Partners were filed this week in the Delaware bankruptcy court overseeing LBI’s Chapter restructuring plan.
Late yesterday, the judge assigned to the case gave his approval to a document that likely puts LBI and its Liberman Broadcasting stations on a path to a new start.
On Wednesday, a long list of LBI’s unsecured creditors surfaced. Among them is a Texas public school district owed thousands of dollars.
But, the bigger news was a green light given by Judge Christopher Sontchi to a Chapter 11 plan disclosure statement submitted to the court by LBI Media.
It is a highly positive ruling for the Burbank, Calif.-based owner of 17 Spanish-language radio stations in Los Angeles, Dallas, Houston and the Riverside-San Bernardino markets; the Estrella TV broadcast TV network; and Fenomeno Studios.
Sontchi’s approval of LBI’s order came concurrent to his denial of a motion that would have shortened the notice of motion tied to the second-lien noteholders efforts to get the court to “commence and prosecute” its fraud claims against LBI, co-founder Lenard Liberman, company executives and board members.
The motion from the second-lien noteholders sought the judge’s approval to set a duration of time shorter than what is normally provided by the court. Sontchi said no, disagreeing with the argument that the matter required a prompt hearing by Sontchi.
That likely gives LBI’s counsel ample time to formulate its defense against several highly salacious claims against the company, brought to the court’s attention by the second-lien noteholders.
Paige Topper of Wilimington-based Morris, Nichols, Arsht & Tunnell — joined by attorneys from Boies Schiller Flexner — asserts that LBI engaged in the fraudulent transfer of at least $87 million to HPS Investment Partners. The firm is led by five principals: Scott Kapnick, Scot French, Michael Patterson, Purnima Puri and Faith Rosenfeld.
This, the Plaintiff Group of Noteholders claims, impaired the value of LBI. The group of noteholders possesses Second Lien Notes issued by LBI, which are due next year.
WHO’S OWED WHAT … AND COULD GET NOTHING
Unsecured creditors, in a bankruptcy filing, end up at the bottom of the payment priority pyramid.
As such, they could wind up with an amount of money that, instead of $3,000, ends up being 3,000 Mexican Pesos — or $157.50.
In the case of LBI Media, the Era Independent School District serving the tiny community of Era, Texas, to the northwest of Denton, is owed $29,840.78.
Why is a school district owed this money? It’s simple: The Era ISD is the landlord controlling the patch of land that houses the broadcast tower for LBI Media’s Class C0 KNOR-FM 93.7 “La Raza” in Krum, Texas; its two other FMs serving the Dallas-Fort Worth market from the far northwest are at a different tower site.
Era ISD is guaranteed the full amount owed, as it is a secured claim.
Dallas County is owed $41,114.54 — also in a secured claim.
Also holding several secured claims is Ford Motor Company.
On the contrary, CenturyLink Communications holds two unsecured claims, totaling $163,939.41.
American Tower Corporation is also a big unsecured creditor, and is owed $101,456.38.
AT&T is owed at least $55,000 in total through a series of unsecured claims.
Kyocera, the cell phone maker, is sitting on a $5,955 unsecured claim.
The Switch, a Massachusetts-based provider of customer-controlled video switching services, has twin unsecured claims of $46,494.44 each.
The Los Angeles-based law firm of Mitchell, Silverberg & Knupp holds an unsecured claim of $33,690.
Then, there are the smaller companies, where every dollar of revenue matters. In Houston, First Choice Coffee Services holds an unsecured claim of $567.64.
Herrada Printing of Colorado has an unsecured claim of $259. Victor Berry’s Studio Concepts of Chino, Calif., is owed $1,122.
What about the U.S. Treasury? The Internal Revenue Servic has a priority claim of $155,621.64 that it will likely receive in full as part of LBI’s restructuring plan.
Los Angeles County is also owed some $76,843 in taxes from LBI.
In total, LBI Media has outstanding payments totaling $549,277.12. Of that, unsecured claims total $242,655.01.