A federal bankruptcy judge has rejected an attempt to push the ongoing Chapter 11 reorganization of Royce International Broadcasting into a Chapter 7 liquidation of the company. Judge August Landis offered no explanation in his two-page decision which was submitted in response to a motion filed by Larry Patrick, who previously worked as a receiver for Royce Stations. The judge also ordered Patrick to provide additional accounting documents to Royce owner Ed Stolz as he works to finalize his reorganization plan.
Patrick, who for more than a year was the receiver of the stations, asked the court in May to convert Stolz’s Chapter 11 reorganization into a Chapter 7 liquidation. Patrick called the reorganization plan submitted by Stolz an “illusion of a plan” telling the court it is “not viable” and “unconfirmable”.
In his response, Stolz called Patrick’s request an “attempt in bad faith” to derail its reorganization process to advance the nearly $6 million deal Patrick lined up with VCY America to buy KREV San Francisco (92.7), KFRH News Las Vegas (104.3 ) and CHR “Hot Hits 97.7” KRCK-FM Palm Springs, CALIFORNIA.
The Stolz reorganization plan seeks the sale of KREV to settle some, but not all, of the company’s outstanding debts. Stolz said he hired broker Robert Mahlman to sell FM under license from Alameda, Calif., suggesting the East Bay signal could fetch tens of millions of dollars based on recent pre-pandemic sales from other FM in the fourth radio market. In a court filing, Stolz said “five or six” broadcasters have so far “expressed interest” in buying KREV.
The potential for a Chapter 7 liquidation of the company filed in court records, however, may have impacted the sale process. Stolz’s attorneys told the court that Indoor Radioit is May 25 report of a potential Chapter 7 conversion might have kept some shoppers away, thinking they might pay “discount clearance” prices if that were to happen. At the moment, that now seems unlikely.
The next battle between Patrick and Stolz will focus squarely on money. Stolz is asking the court to erase the additional $1.2 million Patrick is holding for operating the three FMs during his 18-month receivership.
In a court filing last week, Patrick’s legal team called the “prompt” request for relief “unusual”, arguing that it was “based on little more than several lines of superficial allegations based on no proof and no authority”. He notes that the charges were approved by a federal district court that hired Patrick to serve as receiver.
Stolz is also proposing that nothing be paid to settle VCY America’s $255,000 claim. He increased spending while he operated FMs under a local marketing deal pending his now sidelined $6 million deal to buy the stations.
VCY told the court last week that the expenses were associated with ‘necessary steps to operate and manage’ the stations, such as repairs and the purchase of equipment to keep what it describes as bad FM on the air. maintained.
Stolz has regained control of the stations, but not all of them are on the air. Stolz said earlier he was set to fire KREV back on the air, but now tells the court he “ran into a roadblock” with Pacific Gas & Electric over unpaid utility bills. Stolz also said he was also waiting for new computer equipment.