Embattled IHeartMedia Inc. is circulating documents for a bankruptcy filing that could come as soon as this weekend for the biggest U.S. radio broadcaster.
Advisers to some of iHeart's senior creditors have been shown bankruptcy papers that would be used on the first day of court proceedings, according to people with knowledge of the matter. Despite a year of negotiations on a restructuring plan, a formal support agreement still isn't in place with the most-senior lenders, and the creditors aren't in restricted talks with the company, said the people, who asked not to be identified discussing private negotiations. Creditors typically agree to restrict some of their activities in exchange for non-public information when talks heat up.
A bankruptcy filing is all but certain, with iHeart and creditors each swapping proposals in recent weeks for a consensual restructuring. But pressure is mounting on iHeart after it missed a Feb. 1 interest payment, with a 30-day grace period about to run out. On top of that, the broadcaster on Thursday skipped payments on two more sets of bonds. If the company files without a pre-negotiated restructuring plan in place, the bankruptcy could turn into a free-fall, with some of the biggest and most contentious specialists in distressed companies potentially tussling for years over about $20 billion of debt.