LBI Media 11% notes trustee objects to amended disclosure statement

By Sarah Lizee

Olympia, Wash., Jan. 8 – TMI Trust Co., the trustee for LBI Media, Inc.’s 11% senior payment-in-kind toggle notes due April 30, 2022, objected to the company’s disclosure statement for its amended plan of reorganization, according to an objection filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

TMI said the disclosure statement should not be approved because it fails to provide adequate information for the debtors’ unsecured creditors, including unsecured creditors of LBI Media Holdings, Inc. and of LBI Media Intermediate Holdings, Inc.

The trustee said the disclosure statement lacks detail relating to the debtors’ financial condition, the existence and amount of potential administrative claims, the existence and validity of potential intercompany claims, the nature of the investigation into potential D&O claims and the releases proposed under the plan, the assets potentially available at LBI Media Holdings and LBI Media Intermediate for distribution to their creditors and the impact of an alternative transaction on potential distributions to unsecured creditors.

“The debtors have failed to provide not just adequate information, but any information, with respect to many of these issues,” TMI said.

Additionally, the trustee said that the debtors have failed to explain the rationale for proceeding with the disclosure statement at this point and under the requested schedule “when so many significant events are imminent,” including that the first-lien notes refinance option will be exercised by or expire on Jan. 17, the general bar date is Jan. 22, and bids are due in the debtors’ marketing process on Feb. 4.

In addition, the official committee of unsecured creditors’ investigation is ongoing and is scheduled to conclude on March 4, TMI noted.

According to the objection, the plan is also not confirmable for at least some of the debtors without acceptance by class 6, which is comprised solely of claims relating to the unsecured notes issued by LBI Media Intermediate for which TMI is trustee.

TMI also noted that the debtor’s first plan and disclosure statement filed Nov. 23, 2018 contains deficiencies that remain uncorrected in the amended plan and disclosure statement filed on Friday.

LBI Media is a Burbank, Calif., owner and operator of Spanish-language radio and television stations. The company filed bankruptcy on Nov. 21, 2018 under Chapter 11 case number 18-12655.

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