EAST ST. LOUIS – Entertainment Media Trust, which petitioned for bankruptcy relief as owner of “grim reaper” Bob Romanik’s radio stations in September, moved to voluntarily dismiss the petition on Oct. 16.
The Federal Communications Commission, which aims to revoke four AM licenses belonging to the trust, joined the motion on Oct. 18.
Their agreement doesn’t close the case, because bankruptcy trustee Donald Samson of Belleville immediately objected.
He expressed concern over billables for himself and lawyers he retained, including two who represent Romanik’s stations before the commission.
“There have been extensive briefs in both the FCC and bankruptcy court litigation with the estate incurring substantial administrative costs,” Samson wrote in his objection.
For the FCC, assistant U.S. attorney Adam Hanna of Fairview Heights immediately opposed Samson’s motion.
“Many of these expenses simply increase the amounts owed to the very same lawyers who are creditors in this case based on their representation of the debtor in the regulatory proceeding and who now represent the Chapter 7 trustee,” Hanna wrote.
“Instead of making work for estate lawyers, we urge the Chapter 7 trustee to support dismissal.”
Hanna reserved the right to file his own motion to dismiss, “on the basis that debtor is not a business trust and is therefore not eligible to be a Chapter 7 debtor.”
FCC commissioners charged in June that Entertainment Media 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 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. 11, O’Fallon lawyer Jerry Graham filed a Chapter 7 bankruptcy petition for the trust in East St. Louis.
He 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 liabilities of $99,632 for Davina Shaskin of Arlington, Va., and $6,989 for Anthony Lepore of Washington.
They represent the trust before the commission.
The petition also listed a liability of $14,875 in commission fees. In all, the trust’s liabilities equaled about a seventeenth of its assets.
On Sept. 12, in Washington, the trust moved to stay the license proceedings.
Halprin granted a stay 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 Hanna opposed the motion, claiming the trust filed for bankruptcy to circumvent the license proceedings.
Samson, whose regular role in liquidating estates doesn’t necessarily require the practice of law, moved to appoint himself as his own lawyer at $275 an hour.
He filed a declaration that he had no conflict of interest, but later amended the declaration to state that he represented Dennis Watkins, trustee of Entertainment Media Trust, in bankruptcy court 26 years ago.
He also retained Shaskin, Lepore, and Robert Eggmann of Edwardsville, the only other regular trustee for Chapter 7 cases.
On Oct. 1, Samson plunged into the license proceedings.
Judge Halprin, expecting monthly status reports from the trust and the commission on that date, also received one from Samson favoring 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.”
She wrote that the policy deters misconduct by preventing a licensee from avoiding the loss that would result from revocation.
The trust’s parallel motion for a stay remained pending in bankruptcy court, where Samson placed a price tag on it.
On Oct. 8, he wrote that he received offers of $350,000 from John R. Beck Jr., and $400,000 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.
Hanna responded that Samson’s plan would frustrate the purpose of the FCC.
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.
On Oct. 11, Halprin granted Kern’s motion to strike Samson’s status report.
She characterized it 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.
That afternoon, bankruptcy counsel Graham moved to dismiss the petition.
He stayed on the sidelines in the days that followed, leaving the argument over his motion to Samson and Hanna.
Halprin’s revocation hearing remains set for June.