After three long years, the nation’s most extensive radio network, iHeartMedia, has finally received the approval of Houston Texas Bankruptcy Judge Marvin Isgur to exit bankruptcy. The US-based radio station owner originally filed for Chapter 11 bankruptcy protection in order to decrease its $20 billion in debt.
IHeartMedia Bankruptcy Financing
For companies with a considerable debt load coupled with massive operating costs, bankruptcy financing lies at the cornerstone of a sound Chapter 11 bankruptcy reorganization plan. Bankruptcy financing works by allowing lenders who provide money to fund a company’s operations to assist it through the Chapter 11 process. Also known as debtor-in-possession financing, this form of loan allows the creditor who is providing the money to go to the first in line for creditor repayment. In some cases, a corporation will arrange debtor-in-possession financing before declaring Chapter 11 bankruptcy; however, if the financial situation of a company becomes especially dire, it will file first and then work to locate a creditor during the process.
iHeartMedia After Bankruptcy
iHeartMedia, through the Chapter 11 process, will reduce its debt down to just $5.75 billion, a fraction of its former debt load. Additionally, iHeartMedia, as part of the broadcaster’s bankruptcy reorganization, will create a spin-off group called Clear Channel Outdoor Holding Inc. While exiting the Chapter 11 bankruptcy process is a very positive mark for the organization, some analysts claim that the spin-off could put both companies at risk for a hostile takeover.
Chapter 11 Bankruptcy Exit
The Chapter 11 bankruptcy exit is the equivalent to the individual Chapter 7 or Chapter 13 discharge, as it marks the finish of the bankruptcy process. While there no actual discharge in Chapter 11 bankruptcy, companies that utilize this form of debt relief are often able to negotiate more favorable loan terms which offers substantially decreased debt loads. In order to exit Chapter 11 bankruptcy, companies must have a definite plan to decrease debt and pay back its creditors. If your organization is riddled with debt, contact a business bankruptcy attorney in Texas if your company needs assistance with renegotiating its debt or needs more time to pay back creditors.