A federal bankruptcy court judge has approved Freedom Communications’ deal with its unsecured creditors and its lenders that could allow the company to emerge from bankruptcy by the end of March,
according to a report in the
Orange County Register,
one of the newspapers owned by Freedom.
Under the new plan, scheduled to be confirmed on March 9, Freedom’s secured debt would be reduced from $770 million to $325 million.. Lenders will take over the company and will name a new board, which will be seated when the company emerges from bankruptcy, the article said. The amount to be paid to unsecured creditors will rise from the original offer of $5 million to an estimated $32.2 million, the report noted.
The group left out in the cold under this deal is the current owners, including members of the founding Hoiles family and two private equity firms. Under the original plan, they would have gotten a 2 percent share of the company once it emerged from bankruptcy and the option to buy up 10 percent more. Now they will get nothing.
Freedom had filed for bankruptcy on Sept. 1, the
Register
reported.
The unsecured creditors had denounced Freedom’s original plan as unfair and illegal, noting that under bankruptcy’s absolute priority rule, existing owners typically get nothing until the creditors are paid off.
Freedom owns 32 daily newspapers and more than 70 weekly newspapers, magazines and other specialty publications, as well as eight television stations. (Source:
Orange County Register,
Jan. 21, 2010.)
-
766 reads