Media owner Spanish Broadcasting System has gained court approval of its Chapter 11 reorganization plan. The confirmation sets SBS on a path to exit bankruptcy once the new financial arrangement is given FCC approval.
The company filed a prepackaged restructuring plan in May to cut its debt by more than 75% by transferring ownership to its creditors, according to news reports.
The Chapter 11 case was filed in Delaware after SBS reached an agreement to eliminate about $240 million of its $310 million in debt. The court order approving the reorganization plan was signed July 1 by U.S. Bankruptcy Judge Brendan Shannon.
The FCC will now need to approve the transfer of control of SBS’ broadcast licenses, which could take several weeks or months, according to SBS.
Founded in 1983, SBS owns some of the top Hispanic radio stations in the U.S. It operates 17 radio stations in major markets like New York, Los Angeles, Houston, Chicago and San Fransico.
At the time of the reorganization filing in May, CEO Raúl Alarcón said the restructuring would strengthen its balance sheet and position it for the future.
All of the company’s publicly traded shares will be consolidated and now be held by its debtholders.
SBS in its original petition said it had assets of between $100 million to $500 million and it listed liabilities of the same amount. Its creditors included American Tower, BMI, Carl T. Jones Corp., Nielsen and Dielectric.
According to court documents, the reorganization was challenged by the Internal Revenue Service, which held an unsecured claim of $1.28 million. A second objection, filed by SoundExchange, claimed SBS owed it approximately $1.37 million in royalties and other fees. According to a report by Inside Radio, SBS pledged to pay SoundExchange in full.
The objections were withdrawn in late June, according to court documents.
According to its website, SBS is the largest publicly traded, Hispanic-controlled media and entertainment company in the U.S. It also owns several TV stations in south Florida and operates Mega TV.
SBS last year sold three TV stations in Puerto Rico for $6.5 million. The purchaser was Daystar Television Network.
[Related: Cumulus Hopes to Conclude Chapter 11 by Early Fall]
