Two investors who helped Aaron Kushner and Eric Spitz finance the purchase of Freedom Communications in 2012 have asked the Delaware Chancery Court to put the media company’s operations into receivership, claiming “it needs independent oversight because the company is insolvent and in financial distress from mismanagement,” according to the website Law360.
Abbey Financial LLC and Old Colony 2012 Investment Fund LLC have filed a the request “in part because of the imminent sale of roughly 15 acres of land in California near the company’s headquarters.”
Freedom Communications Holdings Inc. put a 14.3-acre parcel of land near the company’s headquarters in Santa Ana on the market last month. Freedom is hoping to get $45 million or more for the land.
The company recently sold the 173,000 headquarters building at 625 N. Grand Avenue, which also houses the operations of its flagship Orange County Register, in September for $27 million.
Silver Point Finance LLC holds the mortgage on all of Freedom’s real property according to the shareholders, and “is accused of interfering with and having ‘undue influence’ over the Freedom Communications entities and their controlling directors (Aaron) Kushner and Eric Spitz,” the Law360 article states.
“In addition to the insolvency of the company, a receiver should be appointed because, as set forth in detail in the pending fiduciary litigation, [Kushner and Spitz] have abdicated their independent decision-making responsibilities in favor of the company’s lender,” the complaint reads.
Freedom on Thursday denied it is considering bankruptcy.
“Two shareholders are making meritless and unfounded claims against the Company in an attempt to have the Court appoint a receiver to prevent the Company from selling its Santa Ana land, which these two stockholders supported just one year ago. There is no basis for the appointment of a receiver for the land sale and the company is not considering filing for bankruptcy and will defend itself vigorously.
We are pleased that the court today determined that the plaintiffs had not stated a colorable claim for the appointment of a receiver and rejected their motion to expedite.”