Citadel Broadcasting Corp.’s bankruptcy judge refused to delay a hearing today on the confirmation of the company’s reorganization plan, after denying opponents a chance to have an expert witness testify.
“I’m prepared to stay the course,” U.S. Bankruptcy Judge Burton Lifland in Manhattan said in court today after initially granting shareholders’ lawyers a short recess to come up with new expert testimony. “I’ll give you an hour, sir. We’ll stay here as long as it takes.”
Lifland earlier refused to allow testimony from a professor of finance who planned to testify about the valuation of the company. Lifland agreed with Citadel’s lawyers that the witness didn’t have expertise in valuations of broadcasting companies.
“We’re dealing with the radio industry sandbox and there are a lot of nuances in that sandbox,” Lifland said. “There is no nexus between his credentials and the subject matter of his testimony.”
Shareholders led by Aurelius Capital Partners LP opposed Citadel’s reorganization plan, saying that its bankers valued the company too low, thus denying owners of stock any recovery on their investment. They said the bankers used the company’s earnings projections to arrive at a valuation that shows the company is worth less than its debt.
Allan Brilliant, a lawyer for Aurelius, had asked the judge to postpone the rest of the hearing to give shareholders time to come up with new expert testimony about the valuation. The judge gave them one hour.
Christopher Ensley, a former radio industry analyst at Bear Stearns who testified for Aurelius earlier today, was asked by Brilliant to develop an opinion on Citadel’s valuation during that recess and take the stand again.
Upon returning from the recess, Brilliant asked the judge to adjourn the hearing until the end of the week to give Ensley more time to calculate the valuation.
“It’s not fair for Mr. Ensley to prepare this valuation in one hour in the hall,” Brilliant said.
The judge denied the request for extra time.
The witness whom Lifland didn’t allow to testify was Gregg Jarrell, a professor at the University of Rochester.
Citadel, based in Las Vegas, filed for Chapter 11 protection from creditors in December, saying the recession “put a chokehold on advertising spending,” its main source of revenue.
The case is In re Citadel Broadcasting Corp., 09-17442, U.S. Bankruptcy Court, Southern District of New York (Manhattan).