That’s what some began asking upon reading a filing with a Nevada Federal bankruptcy court overseeing the fate of three FM radio stations once licensed to Royce International Broadcasting, the company led by embattled radio station owner Ed Stolz.
The filing, made Monday (12/13) by the attorney for U.S. Trustee Tracy Hope Davis, contains language suggesting Stolz be given back control of three stations stripped from him by California Central District Court Judge Jesus Bernal.
The legal counsel representing the receiver Bernal handed control of the three FM properties to, Larry Patrick, says otherwise.
An eight-page document filed by John Nemecek, trial attorney for Davis, serves as the United States Trustee’s opposition to an emergency motion to excuse the turnover of the stations in favor of the receiver.
As U.S. Trustee for the region that includes Nevada, its opposition to the emergency motion was seen as a “no” to Patrick, who desperately wants to close the sale of Major Market Radio LLC’s KRCK-FM 97.7 in Palm Springs, Calif.; Golden State Broadcasting’s Class A KREV-FM 92.7 in Alameda, Calif.; and Silver State Broadcasting LLC’s Class C KFRH-FM 104.3 in North Las Vegas, Nev., to VCY America.
VCY on March 15, 2021, agreed to purchase the three FMs for $6 million from Patrick, as the court-appointed receiver of the former stations associated with Royce International Broadcasting and Stolz. Patrick gained control of the stations after Stolz, as part of WB Music Corp. v. Royce International Broadcasting Corp., was found to ultimately owe millions of dollars in unpaid music royalty fees. To satisfy the debt, Federal District Court Judge Bernal ordered a sale of the stations, with a portion of the proceeds going to the music rights holders.
While Stolz has submitted funds with the California Central District Court, Patrick’s team argues that some $2.5 million in additional debt remains due.
Then came Stolz’s bankruptcy filing, an involuntary Chapter 11 reorganization plan submitted in Nevada in mid-October. In the Chapter 11 filing, made under the Golden State name, aggregate noncontingent liquidated debts (excluding debts owed to insiders or affiliates) are “less than $2,725,625,” Stolz’s representatives claim.
Conveniently, this equates to the amount of monies Patrick’s representatives say are still owed to the broker and licensee of stations in Wyoming, through Legend Communications.
Fast-forward to Tuesday. Why did Tracy Hope Davis’ legal representative make the filing, and what does it signify?
Brett Axelrod, an attorney at Las Vegas-based Fox Rothschild representing Patrick in the Bankruptcy Court, explains that his review of her filing led to some confusion as to its meaning. “It appears the confusion is owing to poor draftsmanship,” he said. This confusion led iHeartMedia-owned trade publication Inside Radio to produce an article on Tuesday that he calls “inaccurate.” That’s because the U.S. Trustee, Davis, “is only objecting to our motion to the extent the court permits the debtors to proceed in chapter 11—essentially, if the bulk of our motion is denied.”
Indeed, the eight-page filing, while using legal language that could be confusing to interpret, indicates this is true.
If the bulk of Patrick’s motion is denied, and the bankruptcy court allows Stolz’s case to proceed, a bankruptcy estate would be entitled to take on the licenses of KRCK, KREV and KFRH. This move, Axelrod notes, would likely move to appoint a chapter trustee, rather than permit Stolz to retain control.
This clarification will be made on the record during a hearing on the motions. Furthermore, Axelrod says his team plays to restate the trustee’s limited objection — in clearer terms — in a reply brief due at 5pm Friday. “Collectively, this should clarify the point the Trustee very poorly attempted to make in his objection,” Axelrod says.
Meanwhile, Patrick remains steadfast in his assertion that, at this point in a saga that started with unpaid music royalty fees, there’s no way Stolz could somehow win back control of his former FMs. “He is facing an almost impossible road to winning,” Patrick tells RBR+TVBR. “That has not stopped him from pursuing silly claims.”
Still, what may be “almost impossible” does leave the door open for Stolz — and the chance, however slim, that VCY America assumed control of KFRH, KRCK and KREV too soon.
