Cumulus Moves Toward Finish Line As Court Weighs Restructuring Plan.

Cumulus Media heads into Wednesday’s confirmation hearing with what is, on paper, a strong hand. It holds a lender-backed, prepackaged Chapter 11 plan, near-unanimous support from the voting debt classes, a proposed confirmation order already on file, and a shrinking list of unresolved objections. However, bankruptcy Judge Alfredo R. Pérez will still need to confirm the company’s reorganization plan.

Cumulus filed a Chapter 11 reorganization plan last month that will eliminate roughly $592 million of debt and reduce annual cash interest costs by about $49 million. Lenders have also agreed to provide up to $100 million to support operations going forward.

The latest filings show Cumulus is presenting the court with a now fully assembled record. In addition to the modified plan itself, the company has filed updated documents showing the company has already done the hard work with its lenders.

CFO Francisco Lopez-Balboa, who is expected to testify at the Houston hearing, says in written testimony that the reorganization positions Cumulus “for success” once it emerges from Chapter 11. He says the plan is the product of “extensive, arm’s length negotiations” that culminated in the restructuring support agreement. What began with about 72% support from debtholders at the time of the bankruptcy filing has now grown to 100% support from all the major stakeholders across its capital structure.

That support is central to the Cumulus narrative that this is not a free-fall bankruptcy or a case with a competing proposal waiting in the wings. Lopez-Balboa says the debtors have not received “any viable alternative proposal” that would provide more value to their lenders during the restructuring process. “I believe the plan represents the best available outcome,” he tells the court.

Filings show a tax-related objection filed by Tennessee has been resolved and withdrawn. Objections filed by the U.S. Trustee and SoundExchange remain, however. The U.S. Trustee has argued that the plan’s third-party release provisions go too far by binding creditors who do not affirmatively opt out. Cumulus argues the release structure is similar to other recent bankruptcy cases. SoundExchange is seeking assurances the plan does not interfere with its ability to collect royalties, impose late fees, and continue audits.

Cumulus is expected to argue any delays in confirming its restructuring should be waived.

“Time is of the essence,” Lopez-Balboa tells the court, urging the plan be immediately adopted. He says any stay placed on the confirmation will not advance any due process protections. “I believe the restructuring contemplated by the plan was vigorously negotiated among sophisticated parties and is premised on preserving value of the debtors as a going concern,” Lopez-Balboa says.

Cumulus is trying to move from confirmation to emergence from Chapter 11 as quick as possible. Even if the judge greenlights the company’s plan, Lopez-Balboa points out that a series of complicated and time-consuming corporate reorganizational steps must be taken before the process is completed. The company has said it is aiming to exit bankruptcy as soon as early May.

Broad agreement and a rapid timeline have meant the plan under review is largely similar to what was first outlined when it was filed. That includes the creation of special warrants designed to comply with the Federal Communication Commission’s review tied to potential ownership limits and restrictions on foreign investors.

Post-emergence financing also remains as previously outlined.

Taken together, the confirmation hearing is less about whether Cumulus has a deal and more about whether the court will approve the legal packaging around it. If Judge Pérez agrees, Cumulus will be a major step closer to exiting Chapter 11 with a lighter balance sheet, a creditor-owned capital structure, and the runway to get out of court quickly.