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LBI Media first-lien trustee alleges breach of intercreditor agreement
By Caroline Salls
Pittsburgh, March 20 – LBI Media, Inc. 10% senior secured notes trustee Ankura Trust Co., LLC and first-lien noteholder investment adviser HPS Investment Partners, LLC filed a lawsuit on March 18 against holders of the series II 11½%/13½% PIK toggle second-priority secured subordinated notes issued by LBI Media, claiming that the second-lien noteholders breached an intercreditor agreement.
According to the adversary proceeding filed with the U.S. Bankruptcy Court for the District of Delaware, Ankura and HPS said the “defendants have now violated the bargained-for and agreed-upon provisions of the intercreditor in at least five ways.”
Specifically, the plaintiffs said the second-lien noteholders have violated the agreement by seeking to lift the automatic stay to prosecute claims that are the property of LBI Media, have challenged HPS’s entitlement to a make-whole payment, have filed equitable subordination claims against HPS and objected to LBI’s Chapter 11 plan, have attempted to delay the court’s approval of debtor-in-possession financing provided to LBI by HPS and contested the valuation proposed by the company in its plan.
“Defendants’ breaches of the intercreditor come at the expense of the bargained-for rights of the first-lien noteholders and first-lien collateral trustee,” the lawsuit said.
“The breaches also threaten the orderly resolution of LBI’s Chapter 11 proceeding.”
The plaintiffs are asking the court to award damages related to the alleged breaches and to order the defendants to comply with the agreement.
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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