US Bankruptcy Judge Robert Drain holds a hearing today in New York on whether to approve the motion by trustee Kenneth Silverman to keep Interep operating while he seeks a buyer for the radio and TV rep firm. So far, no one has actually objected to the move, but Spanish Broadcasting System (SBS) says it wants some answers about what’s going on with the company that sells national advertising for its 21 radio stations and Mega TV.
Although CBS Radio had previously filed concerns about how Interep was handling ad payments that were supposed to be held in trust for CBS, that was apparently resolved on Monday when Silverman filed a budget for this week showing how payments were to go out this week to radio clients, with CBS, the largest client, in line for the biggest cash distribution.
SBS also wants reassurances that its trust funds are being managed properly. And the company notes that SBS Interep, the boutique Spanish radio rep owned by Interep, had agreed to settle a “previously identified shortfall in payments due SBS” by refunding to SBS on a quarterly basis 20% of all commissions earned and collected by SBS Interep.
The Spanish radio and TV company wants some questions answered about what Silverman is doing. Which portions of Interep does he intend to keep running and which not? Which contracts will Interep continue to perform under? And whose funds are whose in the total of funds held in trust for various clients?
SBS asks that any order the judge issues today specify that any funds due to SBS or Mega TV be properly segregated and paid out to SBS/Mega. It also wants to know the extent to which the trustee plans to perform under the existing contracts to provide national sales representation to the SBS radio stations and Mega TV.
RBR/TVBR observation: Today’s hearing is expected to be basically procedural, unless someone should pop up at the last minute to object. It is apparently a bit unusual for a company to continue operating in Chapter 7, which is bankruptcy liquidation, but as a service company Interep’s primary assets are its rep contracts, which won’t be worth anything if the rep firm stops repping. Silverman had previously indicated that he could have a contract for the sale of Interep signed as soon as tomorrow, so that would really answer everyone’s questions about the company’s future.