MobileMedia Corp. said it filed a stipulation to its reorganization plan with the U.S. bankruptcy court
in order to appease certain unsecured creditors who have objected to it.
The reorganization plan contains the details
of MobileMedia’s merger with Arch Communications Group Inc. A group of bondholders have complained the plan is
not in the best interest of unsecured creditors and has urged MobileMedia to consider alternatives. The stipulation
allows the objecting creditors time to submit an alternative plan of reorganization.
Plans called for the stipulation to
be ruled on March 16, but not all parties had signed it at RCR press time. According to Krista Grossman, MobileMedia
spokeswoman, the judge said the stipulation would be valid once all had signed.
Under the stipulation, the
confirmation hearing originally scheduled for March 26 will be postponed until April 12. The objecting bondholders
would have until March 23 to notify all parties involved if they intend to submit an alternative proposal, and to actually
do so by April 1.
Once submitted, the judge will rule whether MobileMedia’s original plan or the objector’s
alternative is stronger. If he favors MobileMedia’s plan, the objecting parties would not have any further chances to
criticize it.
If he rules in favor of the alternative plan, then MobileMedia either could follow it or incorporate it
somehow.
The objecting bondholders, represented by New Generation Advisers Inc., have delayed the closure of
MobileMedia’s bankruptcy for some time. On Feb. 16, the bankruptcy court directed MobileMedia to supply a
supplemental disclosure statement to and resolicit votes from Class 6 creditors at the behest of the objectors.
The
disclosure statement revealed certain of the standby purchasers of MobileMedia stock were also Arch shareholders, of
which those represented by New Generation did not approve. Once given this new information, the Class 6 creditors
were able to recast their votes. MobileMedia sent out those new ballots Feb. 22 and should begin counting them this
week.
As such, Grossman said the decision to offer the objectors the stipulation was not due to a lack of support
among creditors. She said MobileMedia likely could have gone ahead with its own plan without the support of the
objecting parties, but “We would rather have these objections resolved. It would make it much easier … It gives
them a formal opportunity to present an alternative plan.”
George Putnam III, of New Generation Advisers,
declined to comment on what the alternative reorganization plan may look like. However, the company’s initial
objection to MobileMedia’s reorganization plan revolved around the merger with Arch. “MobileMedia has done a
good job of turning around its business so that it is now capable of emerging from Chapter 11 on its own or finding
another merger partner on more favorable terms,” he said at the time.
