Trustee overseeing Interep says continued operations better than liquidation - for now

By Katy Bachman
Mediaweek.com
(October 29, 2008) Interep spent Monday (Oct. 27) letting advertisers, agencies and the stations it represents know that it hasn't shut its doors yet and is still conducting business. A trustee, attorney Kenneth Silverman, is working with CEO David Kennedy and executive management to preserve as much value in the company as possible, which could lead to a sale of all or part of the company. Meanwhile, all employees of Interep still have a job and for now, there are still two national radio rep firms.

"The trustee has determined that it is in the best interests of the debtors' estates to continue the operations of the debtros and has arranged for ongoing funding of the trustee's operations," Silverman wrote in a letter sent to Interep's clients Monday afternoon (Oct. 27).

While the arrangement gives some breathing room to the radio-rep industry and extends ever so slightly gainful employment of so many people at Interep, it underscores the current economic climate in America and the fast-changing tides in the rough seas of finance. Just last March, Interep was able to work out its financial problems with Oaktree Capital in a bloodless Chapter 11 arrangement that was sure to put the company back on solid financial group by year's end.

But the plan came apart in recent weeks as the national and global financial markets decompressed almost overnight. Expected to clear the final Chapter 11 hurdles just last week, Interep found itself scampering around for new and additional funding until, finally, it was forced to convert the plan to Chapter 7 of the U.S. Bankruptcy Code, which lays out the course for liquidation of a company, and in this case, of an era.

On Friday, Interep filed a motion with the U.S. Bankruptcy Court for the Southern District of New York to convert its bankruptcy Chapter 11 status to Chapter 7 liquidation in order to pay off the company's debtors. The rep firm, which competes with Clear Channel-owned Katz Media, has been in financial trouble for the past three years, losing a number of representation contracts with major groups such as Radio One, Cumulus and Citadel (which purchased the ABC Radio stations).

CBS Radio, the largest group repped by Interep, said in a statement it was looking into alternative national sales representation strategies and will have an announcement soon.


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