There have been no filings with the US Bankruptcy Court in New York to indicate that any other proposal has been made, so it appears likely that the Katz bid to have Interep’s radio rep contracts released for a payment of $3.64 million will be approved today. That would effectively begin a wind-down of the company’s main business.
US Bankruptcy Judge Robert Drain scheduled today’s hearing to decide whether to approve the deal that bankruptcy trustee Kenneth Silverman cut with Clear Channel-owned Katz Media Group which would free-up current Interep radio clients – the largest of which are CBS Radio and Entercom – to negotiate with Katz for national representation, sign with another rep firm (existing or yet to be created) or take their national business in-house. To clear the way for it to bid for that business, Katz has offered $3.64 million and it is also bound to pay nearly $16 million in contract termination payments for clients such as Citadel and Cumulus who jumped from Interep in the past. All of that cash will go to Interep creditors after the costs of operating in bankruptcy are covered.
Unless someone else steps up to bid for the national radio rep business, Drain is expected to approve the deal with Katz. There is no word yet on any bids for other parts of Interep, such as its two Hispanic television rep firms and its interactive business.
Spanish Broadcasting System filed a "Limited Objection" yesterday. It wants the bankruptcy court to clarify that the national rep contracts are not only being "rejected," but "terminiated" so that SBS and other radio groups can negotiate with Katz or any other entity for representation. Also, SBS does not like the part of the agreement that allows Katz to review Interep’s books. SBS says that violates the confidentiality provisions of its contracts with Interep. It doesn’t want Katz to have access to that information unless and until has a signed rep contract.
Meanwhile, Interep’s Chicago landlord has asked the bankruptcy court to terminate its lease. Michigan Plaza LLC wants Judge Drain to compel Interep and Silverman “to immediately vacate and surrender the Leased Premises” and pay over $50,000 in rent for the period since Interep’s Chapter 11 case was converted to Chapter 7. A hearing is set for December 9th. This could be a point of some controversy, since the petition to convert to Chapter 7 indicated that there may be some value in Interep subletting its real estate leases. The motion filed on behalf of Michigan Plaza LLC claims that the Chicago lease is void because no order was issued by the bankruptcy court to allow the Chapter 7 debtor estate to assume the lease.