Secured, unsecured creditors agree on new Freedom bankruptcy plan

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The Orange County Business Journal reported today that Freedom Communications, the bankrupt parent company of the Colorado Springs Gazette, has filed an amended reorganization plan with the Delaware bankruptcy court.

Under the new plan, which was the product of an agreement between the secured and unsecured creditors of the company, all of the company’s equity will be owned by the secured creditors, led by JP Morgan Chase & Co.

The family of Freedom’s founder, R.C. Hoiles, which was slated to retain up to 10 percent of the reorganized company, will now receive nothing.

The new plan calls for the restoration of pension benefits which had previously been eliminated.

Unsecured trade creditors, will now receive $5.5 million. Other unsecured creditors may be able to qualify for payments from a separate $14.5 million dollar fund. Total unsecured claims amount to $300 million.

Freedom’s debt, originally more than $1 billion, will now be reduced to $325 million, which is still considerable in excess of the company’s asset value as estimated in the original bankruptcy filing.

Most of the debt was incurred in a 2004 buyout by private equity firms Blackstone Group LP and Providence Equity Partners LLC that kept family members in control

It is not clear who will control Freedom when the company emerges from bankruptcy. By law, the bank owners must divest themselves of their holdings in the future, but whether they have been in talks with any prospective buyers of the company, or any part thereof, is unknown.