US Bankruptcy Judge Kevin Gross heard arguments Friday on whether to delay the Chapter 11 bankruptcy proceeding for Regent Communications for appointment of a special committee representing current shareholders and, alternatively, on whether to confirm the proposed reorganization plan by management. He plans to rule on Monday.
Resilient Capital Management has led the charge for a special committee, claiming that the proposed $5.5 million “gift” to shareholders undervalues the true worth of the radio company. The motion to create the special committee – and delay the company’s emergence from Chapter 11 reorganization, has been opposed by management.
Another large shareholder, Sanders Morris Harris, threw its support behind the Resilient effort last week. “I believe that the company is being undervalued and that there is substantial residual value for the equity holders that is not being realized,” said a letter to the clerk of the court from Don Sanders. Sanders Morris Harris owns over 5.5 million shares, or approximately 13% of Regent’s stock.
Some smaller shareholders also wrote to the court in support of the idea of a special committee.
If Judge Gross rules against the motion to create a special committee and confirms the reorganization plan as it currently stands, shareholders would receive approximately 12.8 cents per share in cash and the secured creditors, primarily Oaktree Capital, would own nearly all of Regent thereafter.