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Delaware Bankruptcy Litigation Information on Corporate Bankruptcy Proceedings in Delaware and Throughout the United States

Television Station Operator, International Media Group, Files Petitions for Bankruptcy in Delaware

Posted in Bankruptcy Case Summaries

Introduction

Earlier this month, International Media Group and various of its affiliates (the "Debtors"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Debtors’ Chief Restructuring Officer filed with the Court a Declaration in Support of First Day Pleadings (the "Declaration") wherein he described the Debtors as pioneers in multi-lingual programming on U.S. television.  The Debtors started their business in 1977 and at one time broadcast content in 20 different languages.  By the 1990s, however, Debtors focused their programming on Asian languages.  Today, Debtors’ television stations offer programming primarily in Chinese, Korean, Filipino, Vietnamese, English and Japanese.  Decl. at *3. 

Events Leading to Bankruptcy

Debtors’ televisions stations are not network affiliated, but instead operate independently as local, "over the air" stations.  Decl. at *3.  Beginning in 2008, the television broadcasting industry experienced a strong decline in demand for advertising.  The drop in demand was especially significant in the paid programming sector of the industry – the same sector that Debtors operate in.  At the same time that the Debtors were experiencing a drop in demand, the company was also unable to find financing necessary to re-finance its debt.  As a result, Debtors received a default notice from their lenders which resulted in the parties entering in to a forbearance agreement in April of 2009.  Decl. at *5.

Sale of Assets

Debtors filed petitions for bankruptcy hoping to sell their assets as a going concern under section 363(b) of the Bankruptcy Code. Last October, Debtors retained Houlihan Lokey as their investment banker to market and sell substantially all of Debtors’ assets.  Houlihan Lokey contacted 92 parties which it identified as potential bidders for the company’s assets.  Of the parties contacted, 18 have signed non-disclosure agreements and received Debtors’ Confidential Information Memorandum.  Decl. at *7.

FCC Regulations

As stated in Debtors’ Declaration, the "ownership, operation and sale of television stations are subject to the jurisdiction of the Federal Communications Commission (the "FCC"), which acts under authority derived from the Communications Act of 1934, as amended."  Decl. at *8.  The FCC must consent before a television broadcaster enters into, or emerges from, chapter 11 proceedings.  If Debtors are successful in selling their assets while in bankruptcy, the sale will not be implemented until the FCC grants applications approving the new control structure.  To comply with these regulations, the Debtors are required to file a "Long Form Application" in order to obtain approval of the transfer of control following a successful sale under section 363 of the Bankruptcy Code.

This bankruptcy proceeding is before the Honorable Mary F. Walrath.  Judge Walrath previously served as Chief Judge of the Delaware Bankruptcy Court.  Debtors are represented by the law firm Landis Rath & Cobb LLC.

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For those readers who are generally unfamiliar with the bankruptcy process, below are some of my prior posts that address common issues that arise in Delaware bankruptcy proceedings: 

Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy;

What to Expect in a Section 341 Meeting of Creditors;

A Closer Look at Chapter 11 Bankruptcy Auctions; and,

Subject Matter Jurisdiction of the Bankruptcy Court.

Jason Cornell is a bankruptcy attorney with the law firm Fox Rothschild LLP.  Jason practices before the United States Bankruptcy Courts for the District of Delaware and District of South Florida.  You can reach Jason at (561) 804 4415 or jcornell@foxrothschild.com.