Cumulus NASDAQ Delisting Finally Final On 2/5, SEC Objects To Bankruptcy Plan's Third-Party Release Provision

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CUMULUS MEDIA's formal delisting from NASDAQ will be official as of the opening of trading on MONDAY, FEBRUARY 5th, the company told the SEC in a filing THURSDAY (1/25). CUMULUS' appeal of its delisting was denied on MONDAY, NOVEMBER 20th, and the stock moved to trading over the counter on the OTCQX markets the next day; the company did not seek review by the NASDAQ Listing and Hearing Review Council, and the delisting decision became final on THURSDAY, JANUARY 4th.

In addition, the SEC has filed an objection to CUMULUS' bankruptcy reorganization plan, specifically to the nondebtor third party releases, which it says violates the Bankruptcy Code in that only debts of the debtor are affected or can be released by the Chapter 11 provisions, and the court has no jurisdiction over matters entirely involving third parties. In Article VIII.E. of the bankruptcy plan, the company sets forth a provision for third party releases for the company, lenders, and certain creditors and agents, makes the releases automatic if a shareholder or creditor does not opt out, and buries the opt-out selection on page 5 of a 10 page single-spaced ballot.

The SEC contends that the plan does not include sufficient information to support either that the releases would be consensual -- shareholders who get the notice that they will receive nothing under the plan and are not eligible to vote on it, the SEC says, are likely not to look further in the document -- or that "rare and exceptional circumstances" warrant the releases.

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