Freedom Communications, Inc. and its debtor affiliates, and the Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, a Joint Chapter 11 Plan of Liquidation and a corresponding Disclosure Statement on June 4, 2020.
The Debtors and the Committee are co-proponents of the Plan, which provides for the distribution of the remaining assets of the Debtors’ estates, consisting primarily of net cash proceeds from certain settlements. The Plan provides for the liquidation, collection, disposition and distribution of the remaining assets of the Debtors’ Estates and winding-up the Debtors’ affairs and the Chapter 11 Cases. Substantially all of the Debtors’ assets were sold to a third party buyer and the remaining material causes of action of the Debtors were addressed and resolved under certain settlements including with the Pension Benefit Guaranty Corporation. The Plan proposes to fairly and efficiently allocate the Debtors’ remaining Distributable Assets in a manner that is supported by the principal constituencies in the Chapter 11 Cases and will allow such cases to be promptly resolved.
The Plan will be implemented through the substantive consolidation of the Debtors’ Estates for the purposes of voting and Distributions under the Plan, the re-vesting of the Estates’ assets in Liquidating Debtor Freedom Communications, Inc., and the appointment of a Plan Administrator to liquidate or otherwise dispose of the Estates’ remaining assets, if and to the extent such assets were not previously monetized or otherwise transferred by the Debtors prior to the Effective Date.
Class 3 General Unsecured Claims are estimated to total $40 million. The Plan Proponents estimate that Holders of Allowed General Unsecured Claims in these Chapter 11 Cases should recover approximately 0.5% to 5% of the total amount of their Allowed General Unsecured Claims. Except to the extent that a Holder of an Allowed Class 3 General Unsecured Claim agrees to a less favorable treatment, each Holder of an Allowed Class 3 General Unsecured Claim shall receive a Cash payment equal to its Pro Rata share of the Net Distributable Estate Assets on one or more dates as soon as reasonably practicable.
In the event that an aggregate of at least $1,000,000 in Cash in Net Distributable Assets is or will be distributed to the Holders of Allowed Class 3 General Unsecured Claims on account of such Claims, any and all Net Distributable Assets in excess of such $1,000,000 Cash threshold shall be distributed by the Liquidating Debtors to the Holders of Allowed Class 3 Claims and the PBGC (or other Holder of the Class 4 Claims), on account of their Class 3 and Class 4 Claims, respectively, on a Pro Rata basis as soon as reasonably practicable on the Class 3 Distribution Date(s).
Class 4 consists of PBGC Unsecured Claims. The Holder of the PBGC Unsecured Claims shall receive the treatment provided for the PBGC on account of the PBGC Unsecured Claims set forth in the PBGC Settlement. Pursuant to the PBGC Settlement, the PBGC has agreed to waive any right to receive Distributions under the Plan, on account of the PBGC Unsecured Claims, unless and until the Pro Rata Class 3 / Class 4 Distribution Trigger Event occurs.
Class 5 consists of all Interests. Holders of Interests shall receive no distributions under the Plan, and on the Effective Date, all Interests shall be deemed void and of no force and effect.
The PBGC Settlement provides for a total payment of $5,490,000 to the Estates, of which $2,745,000 will be compensation to the Estates for the three years of hard-fought litigation and resulting expense incurred by Committee counsel in connection with its investigation and prosecution of the Committee Action. The aggregate $5,490,000 payment will facilitate the Debtors in continuing to administer the Chapter 11 Cases and confirming a Chapter 11 plan for the benefit of the Estates and their creditors. The Bankruptcy Court entered an order approving the PBGC Settlement pursuant to an order entered on January 13, 2020.
The Plan provides for the distribution of the Debtors’ assets to various Creditors as contemplated under the Plan and for the wind-up the Debtors’ corporate affairs. More specifically, the Plan provides that a Plan Administrator will administer and liquidate all remaining property of the Debtors, including Retained Rights of Action.
A full-text copy of the disclosure statement dated June 4, 2020, is available at https://tinyurl.com/yd39y3u5 from PacerMonitor.com at no charge.
Counsel for the Debtors:
Alan J. Friedman
SHULMAN BASTIAN FRIEDMAN & BUI LLP
100 Spectrum Center Drive, Suite 600
Irvine, California 92618
Telephone: (949) 340-3400
Facsimile: (949) 340-3000
Counsel for the Official Committee of Unsecured Creditors:
Robert J. Feinstein
Jeffrey W. Dulberg
PACHULSKI STANG ZIEHL & JONES LLP
10100 Santa Monica Blvd., 13th Floor
Los Angeles, CA 90067
Telephone: (310) 277-6910
Facsimile: (310) 201-0760
About Freedom Communications
Headquartered in Santa Ana, Calif., Freedom Communications, Inc., owned two daily newspapers — The Press-Enterprise in Riverside, California and The Orange County Register in Santa Ana, California.
Freedom Communications and 24 of its affiliates sought Chapter 11 bankruptcy protection in California with the intention of selling their assets to a group of local investors led by Rich Mirman, Freedom’s chief executive officer and publisher.
Freedom Communications, Inc., et al., filed Chapter 11 bankruptcy petitions (Bankr. C.D. Cal. Lead Case No. 15-15311) on Nov. 1, 2015. In the petition signed by Richard E. Mirman, the CEO, Freedom Communications Holdings estimated assets and liabilities in the range of $10 million to $50 million.
William N. Lobel, Esq., Alan J. Friedman, Esq., Beth E. Gaschen, Esq., and Christopher J. Green, Esq., at Lobel Weiland Golden Friedman LLP, serve as the Debtors’ counsel. The Debtors employed Shulman Hodges & Bastian LLP, as general insolvency counsel; GlassRatner Advisory & Capital Group LLC as financial advisor and consultant; and Donlin, Recano & Company, Inc., as the noticing, claims and balloting/ solicitation agent. FTI Consulting, Inc. was tapped to review Pension Benefit Guaranty Corporation (PBGC) Claims.
The Debtors tapped Robert J. Feinstein, Esq. and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, as counsel; and The Law Offices of A. Lavar Taylor LLP as special tax counsel.
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In April 2016, Freedom Communications completed the sale of its operating businesses and real estate assets to Digital First Media Inc., following a bankruptcy auction. Digital First Media’s $51.8 million bid was approved by the Bankruptcy Court in Santa Ana, after the U.S. Department of Justice filed an antitrust lawsuit against the highest bidder, Tribune Publishing. The final sale to Digital First Media closed on March 31, 2016 for $49.8 million, according to FTI Capital Advisors, which was retained to conduct a formal sale process.
Tribune tendered a $56 million bid but the U.S. government argued a sale to Tribune would give it a monopoly on major newspapers in Southern California.
First Media publishes the Los Angeles Daily News, Long Beach Press-Telegram and other Southern California papers. Digital First Media, a business name of MediaNews Group, offers news reporting and third party advertising and directory opportunities through its more than 800 multi-platform products which include web, mobile, tablet and print.