Creditors seek black radio company's bankruptcy
WILMINGTON, Delaware |
WILMINGTON, Delaware (Reuters) - A large radio broadcasting company targeting African-Americans and founded by civil rights leader Percy Sutton could wind up under the control of billionaire Ron Burkle and other creditors seeking to put it in bankruptcy.
Three creditors asked a bankruptcy judge to put the parent of Inner City Broadcasting Corp into Chapter 11 after the owner of "urban" radio stations around the country, including WBLS and WLIB in New York, pulled out of a deal to restructure its debt.
In a filing Saturday with the U.S. Bankruptcy Court in Manhattan, Burkle's Yucaipa Corporate Initiatives Fund II LP, Drawbridge Special Opportunities Fund Ltd and Fortress Credit Funding I LP said they are owed $254 million by the parent, Inner City Media Corp.
The creditors said Pierre Sutton, the company's chairman and a son of Percy Sutton, scuttled a proposed prepackaged bankruptcy that would have paid unsecured creditors in full, and allowed a small payment to equity holders, which is unusual when a company is insolvent.
The creditors accused Pierre Sutton of rejecting the proposed deal to gain a bigger payout for himself, and ushering in new directors and replacing restructuring advisers who had recommended the prepackaged bankruptcy plan.
A lawyer for Inner City Media did not immediately return a call for comment.
Percy Sutton, who died in 2009, was a civil rights lawyer who represented Malcolm X and was also the longest-serving president of New York's Manhattan borough.
During his time in office he formed Inner City and bought WLIB, making it the New York's first black-owned radio station.
The company went on to own as many as 18 radio stations as well as the Apollo, the famed theater in Harlem, and produced the amateur talent program "It's Showtime at the Apollo."
The company no longer owns the theater or produces the show.
The lenders plan would have given them the majority of the equity in the company and a reduced amount of debt. Shareholders would have received $1.2 million in cash, a 2 percent stake in the company, and warrants for 6 percent of the common stock and stock options of management.
The proposed plan also included a five-year employment agreement for Pierre Sutton with a $600,000 annual salary.
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