EAST ST. LOUIS – Entertainment Media Trust, holder of four licenses for AM radio stations of “grim reaper” Bob Romanik, moved to dismiss its bankruptcy petition on Wednesday, Oct. 16.
In giving up the petition, the trust gave up a pending motion for a stay of Federal Communications Commission proceedings to revoke the licenses.
Commissioners charged in June that the trust concealed Romanik’s control. He can’t hold licenses due to convictions for bank fraud and obstruction of justice. Commissioners found he established the trust and provided all funds for acquisition of the stations.
They also found he identified himself as a radio station owner, assigned the trust’s interests to his girlfriend, and negotiated a marketing agreement.
They referred the charges to administrative law judge Jane Halprin, who set a hearing next June.
On Sept. 9, lawyers for Entertainment Media Trust told her the proceedings forced them to consider bankruptcy.
On Sept. 11, O’Fallon lawyer Jerry Graham filed a Chapter 7 bankruptcy petition at the U.S. courthouse in East St. Louis.
Graham valued the licenses at $2 million, though he would later split that into $1.6 million for the licenses and $400,000 for real property.
He listed a liability of $99,632 for lawyer Davina Shaskin of Arlington, Va., who represents the trust in the license proceedings; a liability of $6,989 for lawyer Anthony Lepore of Washington; and a liability of $14,875 in fees of the communications commission.
In all, the trust’s liabilities equaled about a seventeenth of the assets.
In Washington, on Sept. 12, the trust moved for a stay of the license proceedings.
Halprin granted it on a temporary basis.
The trust filed a parallel motion in East St. Louis, asking Bankruptcy Judge Laura Grandy to stay the license proceedings.
Assistant U.S. attorney Adam Hanna of Fairview Heights opposed a stay, claiming the trust filed for bankruptcy to circumvent the proceedings.
Bankruptcy trustee Donald Samson, responsible for liquidating assets and paying creditors, filed a declaration that he had no conflict of interest.
He later amended the declaration and stated that he represented Dennis Watkins, trustee of Entertainment Media Trust, in bankruptcy court 26 years ago.
He plunged into the license proceedings on Oct. 1.
Halprin, expecting monthly status reports from the trust and the commission on that date, also received one from Samson.
He favored extension of the stay.
St. Clair County board chairman Mark Kern, who started the proceedings with a complaint in 2012, moved to strike Samson’s report.
Halprin didn’t act on Kern’s motion right away, but she lifted the stay on Oct. 4.
She found the public interest demanded that the proceedings continue, that bankruptcy doesn’t automatically stay administrative proceedings and that the value of the licenses wasn’t part of her inquiry.
“The commission’s long standing policy is that it will not, absent exceptional circumstances, renew or approve assignment or transfer of licenses when the licensee’s qualifications to hold a license are in question,” Halprin wrote.
She wrote that the policy deters misconduct by preventing a licensee from avoiding the loss that would result from revocation.
The parallel motion remained pending in bankruptcy court, and Samson put a price tag on it on Oct. 8.
Samson wrote that he received a $350,000 offer from John R. Beck Jr., and a $400,000 offer from Roberts Wireless.
He argued that the commission should stop trying to revoke the licenses so he could sell them while they have value.
“It should be noted that Trustee has no nefarious agenda in this matter,” Samson wrote.
He wrote that sound reasons might exist for disapproval of the licenses, but his motivation was to maximize the return to creditors.
He wrote that an application could be before the commission in 30 days.
Assistant U.S. attorney Hanna opposed a stay, claiming Samson’s plan would frustrate the purpose of the communications commission.
He wrote that Samson sought to sell about $2 million of assets to satisfy about $100,000 in legal fees, “with an excess going to an alleged wrongdoer.”
He wrote that the outcome would provide a road map for using bankruptcy code to evade consequences of designation for hearing on character issues.
Halprin struck Samson’s status report on Oct. 11, finding it was more properly characterized as substantive advocacy for Entertainment Media Trust.
“A status report should not include argument, just facts,” Halprin wrote.
She wrote that she expected to be kept current on relevant developments in the Chapter 7 proceeding in Illinois.
On the morning of the 16th, in Illinois, Samson moved to authorize the sale of assets free and clear of all liens, claims, encumbrances, and interests.
He scheduled an auction Nov. 13, with a buyer in hand at $350,000.
He found the sale necessary because the licenses were in jeopardy.
“Trustee is informed and believes that neither debtor nor its representatives will have any part in the operation of the stations after the purchase of the acquired assets by buyer,” Samson wrote.
“Trustee is further informed and believes that debtor will derive no benefits from transfer of the licenses by the FCC to buyer, and the only potential benefits to be received in connection with the proposed purchase of the acquired asset will be in favor of the innocent creditors of the bankruptcy estate.”
He wrote that due to certain circumstances, the real property is worth substantially less than the trust’s scheduled value and may have minimal or no value.
He attached legal descriptions of the real property.
That afternoon, bankruptcy counsel Graham moved to dismiss the petition.
Halprin’s hearing remains set for June.