Creditors File Bankruptcy Petitions vs. Harry Pappas

13 of Pappas Telecasting's 30 Stations Filed for Chapter 11 May 10

By John Eggerton -- Broadcasting & Cable, 5/16/2008 9:41:00 AM

Pappas Telecasting chairman Harry Pappas said Thursday that three of the lenders in the Fortress loan group that financed some of the company's station purchases filed involuntary bankruptcy petitions (Chapter 7) against him and his wife, Stella.

On May 10, 13 of Pappas' 30 stations filed for Chapter 11, a voluntary bankruptcy proceeding in which the company reorganizes and creates a schedule for paying off its creditors over time.

Pappas said he will fight to have the Chapter 7 petitions dismissed, but he added that they may be converted to Chapter 11.

Pappas Telecasting, which said in a statement earlier this week that the move did not affect its other stations, blamed the Chapter 11 filings on tough financial markets and an inability to get new or replacement financing, although it maintained that many of the stations' revenue and ratings have outperformed the industry.

Chief operating officer Dennis Davis explained in an announcement of the filing that ad revenues were hit hard by the "extraordinary downturn in the housing market (affecting advertising budgets in the furniture, appliance, real estate and other related sectors) and increased energy costs, leading to reduced automotive advertising."

The company said station employees would continue to be paid and it would be "business as usual."