TV Azteca files motion to dismiss involuntary Chapter 11 case

By Sarah Lizee

Olympia, Wash., April 26 – TV Azteca SAB de CV has filed a motion to dismiss the involuntary Chapter 11 bankruptcy case filed against it by bondholders, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

A hearing is scheduled for June 29.

As previously reported, the company said late last month that it would be filing the dismissal motion because there is “no real possibility” that the company can be reorganized in a U.S. court.

“As the petitioning creditors are well aware, [TV Azteca] is a Mexican business that creates Spanish-language television content primarily in Mexico, and operates television networks that broadcast in Mexico,” TV Azteca had said in court documents.

“It has thousands of employees who are overwhelmingly located in Mexico; the vast majority of its revenues come from Mexico; and its business is dependent on licenses issued by the Mexican government to broadcast television on the air in Mexico.”

The company also said it doesn’t operate a television network in or have substantial assets in the United States.

“As a result, under well-established case law, Mexico is the only country that could credibly entertain a restructuring of TVA’s business,” the company said.

As previously reported, the petitioning bondholders are Plenisfer Investments Sicav – Destination Value Total Return, based in Trieste, Italy, Cyrus Opportunities Master Fund II, Ltd., based in New York, and Sandpiper Ltd., based in Greenwich, Conn. Together, they hold about $63.32 million in claims related to the company’s notes.

The bondholders told the court on March 27 that over the past two years, the debtors failed to pay about $66 million in interest payments that were due on a semiannual basis. Following the acceleration of the underlying debt, the debtors, now owe the roughly $494 million in principal and interest, plus continually accruing default interest, fees and other amounts. This constitutes most of the companies’ current debt.

During those two years, noteholders representing seven individual members (including the petitioning creditors) holding over 65% of the principal amount of the notes outstanding made an informal group with the goal of resolving the debtors’ non-payment through negotiation.

“Actions taken by the debtors within the last year, largely in secret, and only disclosed in the last few weeks have demonstrated the futility of private negotiation and the need for a global resolution through the bankruptcy court,” the group said in court documents.

“This court is the only means by which to ensure maximum recovery for all stakeholders and to protect the due process rights of all noteholders, including the petitioning creditors.”

Based in Mexico City, TV Azteca is a producer of Spanish-language television programming. The bondholders filed the involuntary petition on March 20 under case number 23-10385.

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