Air America Radio files Chapter 11

FYI: Chapter 11 is a reorganization, not a liquidation.

From CNN, Bloomberg, Reuters and other sources:

Air America Radio, a liberal news and talk radio network, on Friday filed for Chapter 11 bankruptcy protection after consistently losing money for more than two years.

They also sought bankruptcy court protection because of a breakdown in talks with a creditor.

In a filing with the U.S. bankruptcy court in Manhattan, Air America said it has lost about $40.9 million since the spring of 2004. The Associated Press reports that the company lost $9.1 million in 2004, $19.6 million in 2005 and $13.1 million so far in 2006. The company plans to keep operating as usual while it reorganizes.

The company said it has 4 million listeners. Its on-air personalities also include Robert Kennedy Jr. and Randi Rhodes. In addition, Air America syndicates a radio show from television host Jerry Springer.

Scott Elberg, who became chief executive on Monday, said in an affidavit that Air America's backers advised the company last month that they would no longer subsidize its operating losses.

Elberg, a former general manager of the radio station WLIB in New York, has been with the network since May of last year.

Air America will keep broadcasting as it negotiates with creditors, according to an e-mailed statement from Piquant LLC, which operates under the network's name. Piquant said it filed a Chapter 11 bankruptcy petition in a New York court.

"This regrettable action became necessary only recently when good faith efforts to resolve outstanding debt with a creditor from the company's earliest days broke down," the New York-based company said in the statement.

Last month, creditor Multicultural Radio Broadcasting Inc., blocked the company from drawing on its bank accounts, leaving it without money to operate. The bankruptcy filing will allow Air America to tap these accounts, he said.

Air America said it will seek court permission to obtain up to $3 million of financing from an entity known as Democracy Allies, LLC so that it may operate while under Chapter 11.

None of today's actions relate in any way to the Gloria Wise controversy. WRC-TV in Washington, DC reports that the loan has already been repaid.

And Air America also disclosed in the court documents that two directors departed in the last two months, Douglas Kreeger and Tom Embrescia. Gary Krantz also departed as president in June, and executive vice president Tom Athans and chief operating officer Carl Ginsburg both left in July.

Mike Malloy, who was let go from Air America back in August, chimed in via a post at Democratic Underground, claiming that the "new crop of right-wingers" in management are incompetent, ignorant and not very good at managing a company.

You can see the bankruptcy filing at The Smoking Gun. Air America is reporting assets of $4 million and debts of $20 million.

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