Freedom, creditors reach bankruptcy deal
WILMINGTON, Del. — A federal bankruptcy court judge Thursday approved a deal between Freedom Communications, its unsecured creditors and its lenders that could allow the company to emerge from bankruptcy by the end of March.
Freedom properties include the Clovis News Journal, Portales News-Tribune and Quay County Sun in Tucumcari.
The arduously negotiated deal provides for about eight times more money for the company’s unsecured creditors — including a group of longtime current and former employees — than the company had originally proposed.
“This is a great day — for our employees, for our customers,’’ said Chief Financial Officer Mark McEachen, who was at the hearing where federal Bankruptcy Court Judge Brendan Shannon approved the Irvine, Calif.-based company’s disclosure statement and set March 9 as the date for confirmation of the company’s bankruptcy plan.
Under the new plan, Freedom’s secured debt would be reduced from $770 million to $325 million.
Company officials will now send out ballots to Freedom’s creditors and if they approve the plan, it will go before Shannon on March 9. The lenders, who will take over the company, will name a new board to take over when the company emerges from bankruptcy.
The names of the new board members are expected to be released sometime before March 9.
Thursday’s agreement, reached after what Freedom’s lawyer Robert Klyman called the most intense negotiations he’s ever had, includes several pots of money that will be set aside for those with unqualified pensions, for trade creditors and for a disputed $29.5 million claim stemming from a class-action suit by The Orange County (Calif.) Register’s newspaper carriers.
The company originally offered all the unsecured creditors a total of $5 million. Under the revised plan filed Thursday, that number has swelled to an estimated $32.2 million.
The group left out in the cold under this deal is the current owners, including members of the founding Hoiles family and two private equity firms. Under the original plan, they would have gotten a 2 percent share of the company once it emerged from bankruptcy and the option to buy up to 10 percent more. Now they will get nothing.
McEachen said management will still be able to get a 10 percent share in the new company.
About 100 highly paid current and former Freedom employees, whose unqualified pensions were terminated by the bankruptcy, will have their pensions reinstated at a 70 percent level.
Robert Feinstein, lawyer for the unsecured creditors, estimated that will net the pensioners about $12.2 million.