Equity Media Holdings thwarted Silver Point Finance’s efforts to have a state court put the company in receivership by filing for Chapter 11 reorganization. But Silver Point is back, asking the federal bankruptcy court to order Equity Media liquidated, not reorganized. An emergency hearing has been scheduled for next Tuesday in Little Rock for US Bankruptcy Judge James Mixon to decide whether current management will remain in charge at Equity Media.
In its motion, Silver Point charged that “the gross mismanagement of the Debtor’s business has resulted in continuing substantial losses, and further diminution of the Debtor’s estate is inevitable. Furthermore, the Debtor filed this case with no planning and no exit strategy, and there is no reasonable likelihood that it will be able to reorganize successfully in chapter 11.”
Silver Point wants Judge Mixon to either convert the Chapter 11 case to Chapter 7 (liquidation), appoint a trustee to run Equity Media under Chapter 11 instead of the current management or simply dismiss the case so Silver Point can pursue its efforts to have the state court appoint a receiver.
According to Silver Point, it tried and failed to get Equity Media to work out an orderly bankruptcy and even offered to provide debtor-in-possession financing. The lender claims that all of Equity Media’s cash on hand is pledged as cash collateral and cannot be accessed by the company to pay bills or even make payroll.
Silver Point’s motion states that Equity Media was indebted to its senior lenders for $41.5 million when it filed the Chapter 11 petition on December 8th. The filing by Equity Media checked the box which says it has debts of $50-100 million.
RBR/TVBR observation: This is obviously very different from the situation exactly two years ago when Granite Broadcasting filed Chapter 11. Its primary creditor was also Silver Point, but relations were on much better terms. That bankruptcy petition was filed in consultation with the creditors and today Granite continues to operate after emerging from Chapter 11 last year, with Silver Point as its principal owner and Granite founder Don Cornwell still CEO.