ION Media reorganization plan confirmation ruling to be given Nov. 12

By Alice Popovici

New York, Nov. 3 - The ruling on ION Media Networks, Inc.'s plan of reorganization confirmation was postponed until Nov. 12 by the U.S. Bankruptcy Court for the Southern District of New York.

After hearing statements from the company, first-lien lenders, and Cyrus Select Opportunities Master Fund, a second lien lender, during a Tuesday confirmation hearing, the judge said he will evaluate the issues under dispute and expects to give a ruling at a status conference on Nov. 12.

Prior to the confirmation hearing, judge James Peck heard arguments regarding summary judgment motions, and told Cyrus it is permitted to participate in the hearing, "but at its peril."

"I have serious doubts as to Cyrus's right to do anything in this court," the judge said, adding that there should be consequences in the event Cyrus loses "this fight."

"There's no free lunch and there should not be a free ride through bankruptcy as if documents don't matter - they do."

At the start of the confirmation hearing, ION attorney Jonathan Henes, with law firm Kirkland & Ellis addressed some of Cyrus's objections to the plan's confirmation, one of which was in the form of a proposed amendment to the plan of reorganization.

Henes said he believes Cyrus's plan would be "an issue" for the first lien holders, who "voted overwhelmingly in favor of the plan."

Attorneys for both first lien lenders and the unsecured creditors committee told the court they support confirmation of ION's plan.

But Cyrus attorney Chris Shore, with law firm White & Case, asked the court how the amount of company stock would be preserved in the event the ruling is in favor of ION.

"The first thing we need to do is preserve the amount of stock" left to the second lien lenders, Shore said, adding that under the current plan, 62.5% of the stock is going to the debtor-in-possession lenders.

"That is overcompensating a DIP lender," he said. "They're getting too much stock for the payment of an administrative claim."

As reported Oct. 1, according to an ION press release, the company's plan has the support of holders of more than 70% of ION's first-lien secured debt, who also served as the source of ION's $150 million debtor-in-possession facility, as well as the company's official committee of unsecured creditors.

As previously reported, the plan calls for a complete extinguishment of more than $2.7 billion in debt and preferred stock claims.

In addition, ION said it has received Federal Communications Commission approval of its short-form application for transfer of control of its television licensees, allowing the company to emerge from the bankruptcy process upon court approval of its plan of reorganization.

ION is a West Palm Beach, Fla.-based television broadcaster. The company filed for bankruptcy on May 19 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 09-13125.

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