The quixotic journey that Ed Stolz, owner of Royce International Broadcasting, has taken over the last several decades as a licensee of radio stations has been widely reported across industry trade publications — some of which no longer exist.
From his failed attempt to negate the sale of the former KWOD-FM 106.5 in Sacramento to Audacy Corp. predecessor Entercom to his current dilemma regarding the ownership of three FM radio stations, Stolz has generated widespread interest for his ongoing quests to remain a FCC licensee.
Now, with Stolz given perhaps unprecedented chances to reignite sales and revenue at the FMs as he seeks to emerge from Chapter 11 bankruptcy protection, a Nevada federal bankruptcy court has signaled that time may be up for Stolz. And, that may finally seal his fate, with no choice but to sell the FMs at a liquidation valuation.
A filing made in U.S. Bankruptcy Court for the District of Nevada on Friday by Tracy Hope Davis, the U.S. Trustee for the region, filed an ex parte motion shortening the time on her motion to appoint a Chapter 11 trustee — or, in the alternative, convert the case to a Chapter 7 matter, all but dooming Royce International as an ongoing concern.
Davis wants a hearing on March 1 at 1:30pm Pacific added to the docket of matters already on the calendar for that time. Why is an expedited hearing being requested?
The debtors — Royce-associated Major Market Radio, Golden State Broadcasting and Silver State Broadcasting LLC — have failed to comply with their fiduciary duties, including payment of roughly $1,504 in U.S. Trustee fees, and confirming a reorganization plan “within a reasonable amount of time.”
There’s also net operating losses, and failing to provide proof of insurance.
But, Davis says Royce’s businesses do not currently have counsel of record, and that could be the catalyst for the bankruptcy court to take action.
Will Judge August B. Landis of the U.S. Bankruptcy Court for the District of Nevada do so?
On January 31, Landis gave his verbal approval to an “Emergency Joint Motion” that forced the court-appointed receiver in a California-based federal case against Stolz and Royce International, Larry Patrick of Patrick Communications, to turnover 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 Royce International Broadcasting.
This negated lease management agreements for the trio of stations with VCY America, ahead of what had been a court-ordered divestment of the stations to the non-secular broadcast ministry.
Landis undid that California order, the result of a protracted California federal court battle over unpaid music royalty fees, for one key reason — to thwart that, Stolz filed bankruptcy in Nevada in the hope that a judge there would need to consider all of his assets, including KREV, KRCK and KFRH. That’s exactly what Landis did.
With that decision from Landis, Stolz went to work to demonstrate how Patrick Communications engineered what he believed was a fire sale of the FMs to VCY America. KREV, KRCK and KFRH were sold to VCY for a combined value of $6 million; KREV was marketed by broker Doyle Hadden for one year at a reported asking price of more than $18 million.
The “Debtors’ Scheduled Assets and Liabilities” paint a much different picture, with Stolz in charge of the palate. He believes KFRH-FM, today a simulcast partner of Talk KBET-AM and K276GW in the Las Vegas market, have a value of $20 million. Stolz also puts the value of KREV at $15 million, and KRCK plus two Palm Springs FM translators at $5 million.
No matter how long Stolz asserts that those are the fair values of the stations, current market values may not be germane to the conversation — he will need to sell the trio of FMs, and at the court’s discretion that the divestments be on a distressed basis.
Backing that up is Kristine Kinne, a Reno-based Bankruptcy Analyst who filed a declaration in support of the motion to appoint a Chapter 11 trustee or convert the case to Chapter 7 status.
“Based upon my review of the Court’s official bankruptcy docket in the Debtors
cases, the Debtors filed their voluntary petitions on October 19, 2021,” she said. “Therefore, these cases would have been pending for 498 days without the confirmation of a Plan by the time the UST’s Motion is heard on shortened time by this Court on March 1, 2023.”
Thus, after regaining control of the three FMs, the end for Ed Stolz could be near … or not.
Since October 2022, KREV has been operating with a LGBTQ+-friendly Dance format as “Pirate Radio 92.7.”
