Audacy filed a voluntary Chapter 11 petition on Jan. 7 with a prepackaged plan with its debtholders. Depending on how quickly a Texas court acts, it may close out the year with the process wrapped up. After closing nearly all the open cases related to the reorganization in late October, Audacy has asked Bankruptcy Judge Christopher Lopez to close the books on the remaining open cases.
“The remaining case was left open to address any outstanding issues in the Chapter 11 cases, including fee applications for retained professionals,” the company said in a filing with the Houston court on Monday. Audacy says the court has now approved all the pending fee payouts to lawyers, accountants, and others in all bankruptcy proceedings. “There are no pending matters before the Court,” it said.
Audacy, which owns more than 220 radio stations in 45 markets, filed for bankruptcy to restructure its balance sheet. Under the plan approved by a federal judge in February, Audacy’s emerged from the process with access to new loans and financing. It wiped away 80% of the company’s debt, cutting what had been a $1.9 billion hurdle to $350 million.
The Federal Communications Commission gave its approval in September, and Audacy quickly moved to close the deal hours later. Under the final reorganizational plan, the company is now controlled by Laurel Tree Opportunities Corporation and MBX Commercial Finance. The new owners are providing Audacy with new resources to make any planned pivots. The bankruptcy exit agreement provides $250 million in new loans, in addition to a credit revolver of up to $50 million.
Under the reorganization plan, at any time in the next 24 months, a majority of the new stockholders also have a right to initiate a sale, requiring the board to proceed with “a bona-fide sales process” with outside investment banks. There is no requirement that such a process be held, however.
Carr Plans Second FCC Review
The court move comes even as incoming FCC Chair Brendan Carr, who cast one of the two votes against Audacy’s reorganization plan in the 3-2 party-line vote, says the company’s reorganization will get fresh scrutiny when he takes over.
“There’s a petition pending for reconsideration at the FCC right now, and I want to take a very hard look at that,” Carr said last month. During an appearance on Fox Business, Carr said the Audacy deal was one of many examples of how the Biden administration has played political favorites.
“For too long in this government, particularly over the last couple of years, your last name dictated how the government treated you. If your last name was Soros, the Commission bent over backward and gave you a special, unprecedented commission-level shortcut by 200 radio stations,” Carr said. “Everybody now is going to get a fair shake going forward.”
Audacy’s reorganization was crafted similarly to several others in radio during the past several years. However, the involvement of a fund that has ties to progressive billionaire George Soros caught the attention of conservative lawmakers and outside groups. Critics accused the FCC of giving Audacy a so-called “Soros shortcut” since it allowed the company to get through the bankruptcy process without first waiting for the government to complete its approval process of foreign ownership.
Giving Carr another run at blocking Audacy’s deal as crafted is a petition for reconsideration that was filed by the Media Research Center last month. The conservative group is asking the FCC to rescind its grant, suggesting too little was done to demonstrate the decision was in the public interest. That aligns with Carr’s focus as he looks to lean into the broadcaster’s public interest obligations.