With all eyes last week turned to Washington, D.C., and also fixated on a major audio media company’s name change, attention is just now being placed on the U.S. Bankruptcy Court for the Eastern District of Virginia.
Here, a judge has cleared the way for Alpha Media to exit from debtor-in-possession status.
U.S. Bankruptcy Court Judge Kevin R Huennekens on April 1 formally put the wheels in motion on a reorganization plan, one with two amendments submitted to the court; the second amendment joint plan of reorganization was filed on March 10.
His 494-page order came just over two months’ time since Portland, Ore.-based Alpha Media, led by Chairman/CEO Bob Proffitt, revealed it voluntarily filed for Chapter 11 bankruptcy protection.
The move is designed to reduce some $267 million in debt and, in particular, to restructure Alpha’s agreement with one key lender. This lender fought Alpha, and asked Huennekens to reconsider his order. This request was denied.
In the plainest terms, Alpha Media is converting noteholder debt to equity. Senior secured liabilities would be fully repaid. The second-lien debt would be transformed into an 85% stake, valued at $72.6 million, in a post-bankruptcy Alpha. General unsecured creditors, with some $8.5 million in claims, would get all of the dollars they seek.
With Sheppard, Mullin, Richter & Hampton serving the primary counsel, the second amended joint plan is what Alpha Media will move forward in implementing. And, it is Huennekens’ view that the plan does not discriminate unfairly “and is fair and equitable with respect to the interests in the ‘Deemed Rejected Cases.'”
DBD AMAC LLC, representing the interests of Fortress Investment Group, disagreed. It filed a motion to reconsider and modify Huennekens’ final order. For Huennekens, his order was indeed final.
That means Alpha is approved for exiting debtor-in-possession status, getting financing, gaining the ability to grant liens and move toward profitability.
Huennekens’ approval of the Chapter 11 exit plan also met the approval of unsecured creditors, with a statement filed March 31 with the court.
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