Cumulus Media’s days as a publicly traded broadcaster are at an end. The company’s prepackaged Chapter 11 bankruptcy plan lays out a reorganization that wipes out current shareholders entirely, sees an entirely new board, and could lead to new executive leaders.
So what exactly is a prepackaged bankruptcy? Also known as a “prepack,” it is a restructuring strategy in which a company negotiates a debt relief plan with its major creditors before ever setting foot in court. Rather than filing for bankruptcy and then spending months litigating a path forward, the company hammers out the terms in advance.
It’s not an option for every distressed company; it requires enough goodwill and leverage to bring key creditors to the table before a filing. But when it works, a prepack is widely considered the most efficient path through financial distress short of avoiding bankruptcy altogether.
Under the plan, control of the company would be transferred to its lenders upon closing. When the plan takes effect, holders of the 2029 secured claims will own 95% of the reorganized company. Holders of other funded debt claims receive the remaining 5%. Existing equity is cancelled without any distribution, meaning current public shareholders get nothing.
Cumulus will simultaneously move to deregister under the Exchange Act and delist from any exchange, completing its exit from public markets. The new securities will not be listed on any US or foreign exchange. As such, the company would no longer be beholden to publicly report its quarterly and yearly financials, and could follow in the footsteps of Audacy, which now chooses not to disclose its earnings after emerging from its 2024 bankruptcy and going private.
In other terms of the plan, the current board of Elizabeth Abrams, Deborah Farrington, Carol Flaton, Steven Galbraith, David Tolley, and Chairman Andy Hobson will be ousted. On the effective date, every current director is deemed to have resigned, and a new board, appointed under the restructuring framework and backed by the creditor group, takes their place. Those names are yet to be revealed.
The company is also finalizing amended agreements with CEO Mary Berner and CFO Frank Lopez-Balboa, with the plan careful to note that the new board will not be constrained in its ability to replace those officers later. Lenders are reserving 10% of the new common stock on a fully diluted basis for a management incentive plan, suggesting creditors want operational continuity at the top while preserving maximum flexibility to reshape leadership once they are formally in control.
Berner has led Cumulus since 2015.
