Questions abound surrounding iHeartMedia’s voluntary Chapter 11 bankruptcy filing. Womble Bond Dickinson attorney Jeff Tarkenton provided some possible answers in a recent interview with Radio World.
Tarkenton’s thoughts on the filing include:
iHeartMedia can continue to operate as normal during its reorganization. “The purpose of iHeartMedia’s reorganization is to convert much of its debt to equity and fix the balance sheet,” Tarkenton tells Radio World. “The broadcaster says the deal will reduce its debt by about $10 billion. That’s substantial.”
The company faces three possible outcomes: 1. It successfully reorganizes, exits bankruptcy and resumes business as usual. 2. The company cannot continue and is forced to liquidate its assets in Chapter 11. 3. The case is converted to a Chapter 7 case, “in which a trustee is appointed to liquidate the assets, and the debtor company ceases operations.”
Financial and/or legal complications may arise during the bankruptcy proceedings.
To emerge from Chapter 11, iHeartMedia must file a plan that is approved by the court and, in all likelihood, by each class of creditors whose claims have been impaired.