SBS Wins Approval For $30 Million Financing As Restructuring Advances.

Spanish Broadcasting System has passed two mileposts in its Chapter 11 case after a Delaware bankruptcy judge granted final approval for both the company’s employee compensation programs and its debtor-in-possession financing package, giving SBS the resources to continue operating while it works to complete its prepackaged restructuring.

The rulings move the broadcaster beyond the initial phase of the bankruptcy process and into implementation of the restructuring plan that will ultimately hand ownership of the company to its creditors.

The orders most critically authorize SBS to access the full amount of its $30 million debtor-in-possession financing facility. Under the financing structure, $7 million became available immediately after the bankruptcy filing, another $13 million became available once the court entered the final order, and a final $10 million tranche can be drawn either with creditor approval or if the restructuring shifts into the previously disclosed “sale pivot” process.

In approving the financing package, Bankruptcy Judge Brendan Shannon concludes SBS has an “ongoing and critical need” for the funding and use of cash collateral in order to “maintain, administer, and preserve their businesses and maximize the value of their assets.” The order also says that without access to the financing, SBS “would be immediately and irreparably harmed.”

The order also reinforces the strength of creditor support behind the restructuring. The judge acknowledges that certain noteholders agreed to provide the financing “for the benefit of the debtors’ estates” rather than pursue remedies against the company’s assets.

The financing order also includes stipulations by SBS acknowledging the validity of approximately $310 million in senior secured notes and related creditor claims. The company tells the court that creditor liens are enforceable.

Separately, Judge Shannon has entered a final order authorizing SBS to continue paying employee wages, commissions, reimbursable expenses, severance obligations and benefits programs in the ordinary course of business. The move had been expected.

The order authorizes SBS to “honor and continue all compensation and benefits programs that were in effect” when it filed Chapter 11, and to continue making payroll-related tax payments and benefit contributions. The court also approves continued funding of workers’ compensation programs and related obligations.

The employee order is consistent with the company’s earlier assurances that the bankruptcy process would not disrupt day-to-day operations. SBS has repeatedly said it intends to continue serving listeners and advertisers while pursuing a restructuring that will slash its debt from roughly $310 million to about $70 million and transfer ownership to lenders. Support for the restructuring has grown substantially since SBS first unveiled its restructuring plans in early-April. More than 90% of debtholders now support the deal.

Newly appointed Chief Restructuring Officer Jesse York says the bankruptcy is intended to implement a “consensual, comprehensive deleveraging transaction” that will allow SBS to continue operating normally while dramatically reshaping its balance sheet.