Vice Media gets court sign-off for bankruptcy loan

Monroe Capital

16/05/2023 21:14

By Dietrich Knauth
       NEW YORK, May 16 (Reuters) - Vice Media received court
permission on Tuesday to borrow $5 million to fund its
bankruptcy, saying it will use the money in part to pay
freelancers and prepare the company for a sale. 
    U.S. Bankruptcy Judge John Mastando at a hearing in
Manhattan said he would allow Vice to borrow additional money
from its existing senior lenders, a group that includes Fortress
Investment Group, Soros Fund Management and Monroe Capital
 MRCC.O .
    Mastando said he would approve the first $5 million of the
loan within a day, and that he would consider Vice's request to
borrow an additional $5 million in June.
    Vice attorney Kyle Ortiz said that approval of the
bankruptcy loan would also unlock $20 million in a frozen bank
account, as part of the lenders' agreement to fund Vice's
bankruptcy. Vice will have more than enough cash to pay $2
million owed to freelancers and other pressing operational
costs, Ortiz said.
    Vice was among a group of fast-rising digital media ventures
that courted millennial audiences and once had rich valuations.
Along with contemporaries like Buzzfeed, Vice stumbled as
advertising profits fell and interest rates rose. 
    The freeze of the company's bank account, which happened in
the past week, accelerated its path toward bankruptcy after
earlier setbacks, which included missed growth targets, the
shutdown of the "Vice News Tonight" television broadcast, and
company layoffs, Ortiz said. 
    Vice's bank, JPMorgan Chase  JPM.N , froze a large account
due to competing creditor claims asserted on May 10 by Wipro
 WIPR.NS , a tech services provider, and by the Fortress lender
group that is providing Vice's bankruptcy loan. 
    Wipro recently won a $9.9 million judgment against Vice in
an arbitration over a canceled services agreement, and it filed
a restraining notice with JPMorgan. The Fortress lenders said
that they had a greater right to the cash, as Vice's senior
lenders, causing JPMorgan to freeze the account until the matter
could be cleared up, according to Vice's court documents.  
    The Fortress lender group, owed $474.6 million, is pushing
Vice toward a quick sale in bankruptcy, and it has offered to
buy the company at a $225 million valuation.  

 (Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and
Marguerita Choy)
 ((Dietrich.Knauth@thomsonreuters.com;))