Freedom Communications Creditors Lash Out

WILMINGTON, DEL.: Unsecured creditors for bankrupt Freedom Communications are raising objections with the Chapter 11 proceeding, according to reports in Law360. The group has asked Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Deleware to reject Freedom’s investment banker for the case, Houlihan Lokey Howard & Zukin Capital Inc. The firm stands to make in excess of $7.2 million, perceived by the group to be “grossly excessive” for what amounts to a “straightforward... debt-for-equity plan,” 360 said. The group also said Houlihan Lokey has a conflict of interest on the case, since it’s $6 million transaction fee will come before the claims of unsecured creditors.

The same group also raised red flags over Freedom’s effort to free $7 million in cash for bonuses, while unsecured creditors are now allotted just $5 million in compensation. A hearing is scheduled Oct. 14 to address the issue.

Irvine, Calif.-based Freedom filed for Chapter 11 bankruptcy Sept. 1, with $1 billion in debt. The company owns eight TV stations and around 100 newspapers.

September 2, 2009: “Freedom Files for Chapter 11
Freedom Communications has filed for Chapter 11 bankruptcy. 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.