Add to balance / Manage account | User: | Log out |
Prospect News home > News index > List of issuers L > Headlines for LBI Media Inc. > News item |
LBI Media second-lien noteholders claim they are owed $129.5 million
By Caroline Salls
Pittsburgh, Jan. 16 – A group of holders of LBI Media, Inc. series II 11½%/13½% PIK toggle second-priority secured subordinated notes due 2020 filed a lawsuit Tuesday alleging that the company, its chief executive officer and controlling shareholder, its remaining directors and HPS Investment Partners, LLC schemed “to prevent plaintiffs from recovering about $129.5 million.”
According to the complaint filed in the U.S. Bankruptcy Court for the District of Delaware, LBI, president, CEO and controlling shareholder Lenard Liberman, directors Jose Liberman, Winter Horton, Rockard Delgadillo, Peter Connoy and Neal Goldman and HPS failed to honor a contract requirement that the proceeds from any sale of spectrum assets be used solely to retire the company’s first-lien debt.
The noteholder group said using the proceeds in this way would have reduced LBI’s overall debt “and permitted a relatively straightforward restructuring that involved refinancing any remaining first-lien debt and equitizing the second-lien debt.”
“After the sale by LBI of the spectrum assets, LBI violated this core contractual restriction and otherwise set about to disadvantage and disenfranchise the holders of the second-lien notes,” the lawsuit said.
Specifically, the noteholder group alleged that, in the months leading up to the company’s bankruptcy, and while LBI was insolvent, the “defendants wrongfully diverted funds to preferred creditors and company insiders, thereby eliminating plaintiffs’ ability to recover on their notes and precluded plaintiffs, as holders of LBI’s ‘fulcrum’s securities,’ from receiving the 100% ownership stake in the reorganized debtor to which they would otherwise have been entitled.”
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.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.