NEW YORK (Reuters) – A creditor of U.S. television station owner Equity Media Holdings Corp, which filed for Chapter 11 bankruptcy protection this week, has asked a judge to convert the case to liquidation, or dismiss it, according to court papers.
In an emergency motion filed on Wednesday, Silver Point Finance LLC, a lender on one of the company’s senior credit facilities, said the case was filed with “no planning and no exit strategy” and that the company had been a victim of “gross mismanagement.” It said the case should be converted from Chapter 11 to Chapter 7 for an orderly liquidation, managed by a court-appointed overseer.
Equity Media filed for protection from its creditors on Tuesday in U.S. Bankruptcy Court in the Eastern District of Arkansas. The company, founded in 1998, owns 121 television stations, licenses and permits. Spanish language broadcasting company Univision Communications Inc. holds an 8 percent stake in the company, according to Equity Media’s website.
Silver Point last week sought a judicial foreclosure and receivership proceeding in the Circuit Court of Pulaski County, Arkansas, to try to get their money back from the company.
“The sole purpose of (Equity Media’s) bankruptcy filing was to stay the foreclosure proceeding and thwart the secured lenders’ attempt to protect the rapidly deteriorating value of their collateral,” Silver Point said in the court filing.
Silver Point also said Equity Media had rejected “repeated offers” from the lender to provide debtor-in-possession financing, so the company could hire experienced bankruptcy lawyers for the case and fund an orderly sale of its assets as a going concern in Chapter 11.
“There is no prospect for a successful restructuring,” Silver Point said in the court documents, adding that the company may have put its subsidiaries at risk by only filing the parent company into Chapter 11.
An attorney for Equity Media declined to comment.
An emergency hearing has been scheduled for Dec. 16, according to court documents.
(Reporting by Ilaina Jonas and Emily Chasan; editing by Gunna Dickson)