Citadel Broadcasting files Chapter 11

story by Inside Radio

Citadel Broadcasting has filed a "pre-arranged" Chapter 11 reorganization plan with a New York bankruptcy court. The deal with the lender group is expected to wipe out much of Forstmann Little & Co.'s 29% stake and turn control over to the lenders group, led by JPMorgan Chase. Today's filing shows Disney is among Citadel's creditors with an $11.2 million claim. Citadel bought ABC Radio from Disney for $2.7 billion in 2006.

Citadel CEO Farid Suleman is expected to remain in place under the takeover scenario. He's said the Chapter 11 option would be a last resort, but if it came down to a bankruptcy there would be no impact on station operations and told Inside Radio earlier this month he wasn't planning to spin-off any assets to raise cash. "It hasn’t happened up until now and will not happen in the future," said Suleman, who added staff cuts weren't on the table. "It will have zero effect on the operation or the employees of our business," he said.