US Bankruptcy Judge Kevin Gross hasn’t ruled yet on whether Nassau Broadcasting Partners should be in Chapter 7 bankruptcy liquidation or Chapter 11 reorganization, but he’s set a hearing for Wednesday (10/12). He granted a motion by Nassau to speed up the process and Nassau’s creditors, who had filed the involuntary Chapter 7 petitions have until Tuesday to file any objections to Nassau’s motion to convert the case to Chapter 11 and continue business as usual while the radio company reorganizes.
Judge Gross has also scheduled so-called “first day” motions for Wednesday. In a Chapter 11 proceeding those motions would allow the debtor-in-possession to meet payroll, pay routine bills and continue operating its businesses as it begins the reorganization process.
By scheduling the “first day” motions Judge Gross hasn’t guaranteed that he will approve the conversion from Chapter 7 to Chapter 11. But if he approves that move – which appears likely – he would then quickly move on to begin the Chapter 11 reorganization process.
RBR-TVBR observation: The Chapter 7 filing appeared to be a legal tactic on the part of Goldman Sachs and the other lenders. Shutting down Nassau’s operations and then selling the stations at fire-sale prices would result in a much smaller recovery for the lenders than a Chapter 11 reorg, which may or may not involve some sales of operating, cash-flowing stations – not to mention that it made no sense to needlessly add to the unemployment rolls.