Young Broadcasting's official committee objects to plan confirmation

By Lisa Kerner

Charlotte, N.C., May 5 - Young Broadcasting Inc.'s official committee of unsecured creditors objects to the court's April 19 confirmation of the company's plan of reorganization, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

A hearing is scheduled for May 7.

The committee wants a 28-day window of opportunity before the plan effective date to seek a sale of the company or a refinancing, citing changes in the market since the confirmation hearing held in January.

If the debtors are successful in marketing the company, the lenders will be paid in full. And if unsuccessful, the lenders' plan will proceed and they will own the company, the filing said.

As previously reported, a competing plan submitted by the official committee was rejected.

Under the company's plan, holders of pre-bankruptcy lender claims will receive a distribution of $75 million face amount of five-year senior secured holding company notes, which will accrue interest at a rate of Libor plus 500 basis points.

Young Broadcasting said the lenders' $200 million credit bid was selected as the prevailing bid for substantially all of the company's assets.

Under the committee plan, all $338 million of the debt owed to the lenders, including post-bankruptcy interest and principal amortization payments, would be reinstated.

If the credit agreement was to be reinstated, at the time of the loan's maturity in November 2012, a principal balance of $325 million would become due.

In denying the committee plan, judge Arthur J. Gonzalez said the committee failed to prove that Young Broadcasting would be able to repay its debt when it comes due in November 2012 either through a refinancing or sale, Prospect News previously reported.

Gonzalez said the committee did not establish that the company would obtain refinancing in November 2012.

New York-based Young Broadcasting owns 10 television stations and the national representation firm Adam Young Inc. The company filed for bankruptcy on Feb. 13, 2009. Its Chapter 11 case number is 09-10645.

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