Granite Broadcasting, Silver Point object to preferred equity holders' examination motion

By Caroline Salls

Pittsburgh, Jan. 25 - Granite Broadcasting Corp. and Silver Point Finance, LLC objected to a request by several Granite preferred equity holders for an examination of Silver Point and Granite, according to Wednesday filings with the U.S. Bankruptcy Court for the Southern District of New York.

According to both objections, the examination motion is the latest of the preferred equity holders' attempts to use the discovery process to maximize pressure on the company in hopes of creating leverage against Granite and Silver Point.

Silver Point also said the preferred equity holders made the examination request in an attempt to gain leverage to upset the plan of reorganization confirmation process.

"The motion was filed as a litigation tactic to harass and annoy Silver Point and [Granite], which is improper," Silver Point said in its objection.

"The court should make clear that it will not tolerate the efforts by out-of-the-money constituents to protract these Chapter 11 cases at the expense of innocent creditors and the estate."

Granite and Silver Point said the preferred equity holders have already served extensive discovery requests in connection with their objection to the motion to approve the company's debtor-in-possession financing arrangements and their planned objection to Granite's motion to retain Houlihan Lokey Howard & Zukin as its financial adviser.

Both times, Granite said the preferred equity holders demanded expansive document discovery and testimony on as short a notice as possible in an effort to cause the company to incur significant expenses, "no matter how ordinary the motions were in the context of a Chapter 11 proceeding."

In addition, Granite said the preferred equity holders want Granite and Silver Point to produce expansive amounts of information and make witnesses available for testimony on extremely short time frames, despite the fact that the hearing on the confirmation of the company's plan of reorganization does not start until April 16, which Granite said is more than enough time for the preferred equity holders to conduct discovery.

The motion was filed by preferred equity holders Harbinger Capital Partners Master Fund I, Ltd., GoldenTree High Yield Master Fund II, Ltd. and MFC Global Investment Management (U.S.), LLC.

Granite, a New York-based owner and operator of network-affiliated television stations, made a prepackaged Chapter 11 filing on Dec. 11. Its Chapter 11 case number is 06-12984.

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