Freedom Communications Inc.'s unsecured creditors are asking court permission to look for an alternative to the Chapter 11 exit deal being pushed by the media company and secured lenders led by JPMorgan Chase & Co.
The publisher of the Orange County Register agreed to a "no-shop" clause with secured lenders, the group that gets the company if the Chapter 11 plan goes through, creditors say. The no-shop pact would doom lower-ranking creditors to a poor outcome from the bankruptcy protection that began Sept. 1, they claim.
In a filing Tuesday with the U.S. Bankruptcy Court in Wilmington, Del., Freedom's unsecured creditors said that they want to do what the Irvine, Calif., company should have done and look for alternatives to the current Chapter 11 plan.
Lawyers for the official committee of unsecured creditors said that they deserve "a fair chance to test the market and pursue interested parties who may be willing to sponsor a plan of reorganization."
Freedom has agreed to a restructuring that would give most of the company to banks that are owed $770 million.