U.S. Bankruptcy Judge Kevin R. Huennekens ruled Tuesday that Sandton Capital Partners may credit bid on all Free Lance-Star assets, except for those on which the creditor does not have a direct lien. The excepted assets include the publishing company’s FCC radio licenses, radio towers, vehicles, life insurance policies and bank accounts, according to All Access Music Group.
It can credit bid on the newspaper, websites, radio station facilities, printing plant and real estate holdings.
Sandton Capital Partners bought the $38 million outstanding loan balance from BB&T last summer. “The FLS, which remains profitable, never missed a loan payment to BB&T, but fell out of compliance with an agreement governing the ratio between earnings and debt,” the newspaper reported.
Judge Huennekens will hold a hearing March 31 to decide how much Sandton may bid. The primary creditor wants to bid the entire $38 million. Attorneys for the Free Lance-Star argue that would deter others from bidding.
“Tuesday’s ruling sets up the possibility that Sandton could take over most of the FLS’ assets while another entity buys the remainder, many of which involve the company’s radio operation,” the Free Lance-Star reported. “It’s also possible that FCC rules on media ownership could require the radio and newspaper properties to be owned by separate entities.”
The Free Lance-Star publishing company filed for Chapter 11 bankruptcy on Jan 23. In addition to the daily newspaper, the company’s assets include Fredericksburg.com, Freelancestar.com, WFLS, WVBX (formerly WYSK), WWUZ and WNTX. It also owns real estate and other digital operations, the newspaper said.
According to the Free Lance-Star, interested parties have until May 9 to submit a bid. The auction is scheduled May 15, a sale hearing is expected May 22, and the assets are expected to be sold officially by June 20. A second closing will address FCC issues.
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Free Lance-Star Publishing Company Advances Toward Sale of Assets
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