Long, complicated restructuring talks between Nassau Broadcasting Partners and its senior lenders have apparently hit a brick wall. The lenders have taken the drastic step of filing to put the radio group into involuntary Chapter 7 bankruptcy liquidation.
While Chapter 11 is the more normal course for a functioning business with an out-of-whack balance sheet, Chapter 7 is the route normally used to shut down a business and sell off its assets. Broadcasters may recall that Interep moved into Chapter 7 to be liquidated after the radio rep firm failed in several months of efforts to reorganize under Chapter 11.
But Nassau, headed since 1986 by Louis Mercatanti Jr., has 54 AM and FM stations which, at last report, were all on the air, selling advertising and paying employees. Shutting down operations would diminish the value of the assets which could be sold and thus reduce the eventual payments to the creditors.
Nonetheless, Goldman Sachs Lending Partners LLC, Fortress Credit Opportunities I LP and P.E. Capital LLC have filed with the US Bankruptcy Court in Delaware to force Nassau into Chapter 7. Goldman claims it is owed $69.8 million, Fortress $11.2 million and P.E. $2.8 million. That’s $83.8 million in total.
In response to an inquiry from RBR-TVBR, Nassau said “There is no comment as of now.”
Nassau has 21 days to respond to the bankruptcy petition once it is officially served with legal notice.
RBR-TVBR observation: Talk about playing hardball! Demanding Chapter 7 for a functioning broadcast group is an action which would have the lenders cutting off their nose to spite their face. Chapter 11 and an orderly reorganization and/or divestiture would make a lot more sense for everyone.
