Burdened with $530 million in debt, LBI Media Inc. and 17 of its affiliates and subsidiaries filed for Chapter 11 relief, announcing plans for a company reorganization.
The privately owned Spanish-language media company, which operates EstrellaTV network, 10 television and 17 radio stations across the country, cited changes in viewer habits, a drop in advertising revenue and continued litigation between its first lien lender, HPS Investment Partners, LLC, and a group of its second lien noteholders led by Caspian Capital LP, as reasons for its filing.
The California-based LBI Media had been struggling for months as it sought financing to continue operations and avoid bankruptcy as it battled a heavy debt load and investor pressure.
The company has secured an additional $38 million loan to continue operations, but the junior lenders, who accuse HPS, LBI and its CEO Lenard Liberman of financial fraud and trying to defraud them of $115 million, say they will continue their legal fight outside of bankruptcy court.
Read more extensive details, including the internal email sent by Liberman to staff on Forbes.