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Court Allows Freedom Creditors to Pursue Alternate Reorg Plan

WILMINGTON, DEL.:The judge handling Freedom Communication’s bankruptcy is allowing the company’s unsecured creditors to develop their own reorganization plan. Freedom’s proposed plan would have given its secured lenders control of nearly all of the reorganized company’s equity and $325 million in new notes. When Freedom filed for Chapter 11 on Sept. 1, it submitted the plan to allow J.P. Morgan Chase, SunTrust and Union Bank of California to take over the company. All three collectively held around $770 million of Freedom’s $1 billion debt.

The media company’s unsecured creditors would have received just $5 million on $300 million in claims. The group filed an objection with the court in October. Judge Brendan Shannon on Wednesday granted the group’s request to allow its investment bankers to investigate alternative reorganization plans.

Freedom has around 100 newspapers and eight TV stations.

More on Freedom:

November 9, 2009: “Execs at Bankrupt Freedom Take $3.7 Million in Bonuses”
Executives at Freedom Communications took $3.7 million as the company spun toward bankruptcy.

November 2, 2009:Freedom Files Reorganization Plan
Freedom’s secured lenders will take over the company under a debtor-in-possession agreement reached before the filing.

October 12, 2009: “Freedom Communications Creditors Lash Out”
Unsecured creditors for bankrupt Freedom Communications are raising objections with the Chapter 11 proceeding.

September 2, 2009: Freedom Files for Chapter 11”
Under deal terms, lenders will take over the company, which includes eight TV stations and around 100 newspapers.

August 31, 2009: “Freedom Communications Expected to File Chapter 11”
Freedom defaulted last fall, but reached agreements in April with senior credit facility lenders to waive certain requirements through the end of the year.