LBI Media 11½%/13½% notes trustee, informal group object to plan

By Sarah Lizee

Olympia, Wash., Jan. 10 – LBI Media, Inc.’s informal group of 11½%/13½% payment-in-kind toggle second-priority secured subordinated notes due 2020, series 2 noteholders objected to the company’s disclosure statement for its amended plan of reorganization, according to an objection filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The group said that neither they nor any other stakeholder in LBI Media knows what they are being asked to vote on, what they and other stakeholders are proposed to get, and what releases, compensation and other benefits those “under the tent” stand to get, and for what consideration.

According to the objection, the plan isn’t clear on if the company will be sold, restructured or wound down, and what procedures and approvals will be sought.

“We have no idea. And we’ve asked, formally and informally, in writing,” the group said.

The group said that the debtors are asking creditors to vote to approve the plan that may take an unknown form sight unseen.

Under the debtors’ current construct, the fate of all creditors of the debtors would lie in the hands of a two-man restructuring committee, the group said.

“All creditors know based on the disclosure is that if two people decide to pursue an alternative transaction, the plan as drafted would give the debtors broad authority to pursue and consummate such transaction, all without the necessary procedures under the Bankruptcy Code and approvals by the Bankruptcy Court,” the group added.

The group also noted the “extremely accelerated timetable that the debtors insist upon for no reason.”

Additionally, U.S. Bank NA as trustee of the 11½%/13½% notes objected to the amended plan and voting procedures, according to a separate objection also filed Wednesday.

The trustee said the plan “goes too far in undermining the voting rights of beneficial noteholders” through a combination of inadequate information, insufficient time, substantive changes to the value or terms of the new equity interests to be effected by plan supplements and discretionary actions of the debtors, and forfeiture of significant recoveries by one class improperly attached to the negative class votes by both the affected class and another class.

U.S. Bank said that the debtors have also failed to include certain provisions recognizing the trustee’s appropriate role in distributing any amounts or interests payable to noteholders under the plan.

LBI Media is a Burbank, Calif., owner and operator of Spanish-language radio and television stations. The company filed bankruptcy on Nov. 21 under Chapter 11 case number 18-12655.

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