ION Media lenders ask court to enforce DIP loan order, dismiss lawsuit

By Caroline Salls

Pittsburgh, Sept. 30 - ION Media Networks, Inc.'s informal first-lien lender group has asked the U.S. Bankruptcy Court for the Southern District of New York to enforce its final order approving the company's debtor-in-possession financing in light of a lien-challenge lawsuit filed by second-lien debtholder Cyrus Select Opportunities Master Fund, Ltd., according to a Tuesday court filing.

The first-lien lenders said Cyrus has filed a lawsuit challenging some liens and security interests granted under pre-bankruptcy loan documents despite the bankruptcy court's explicit order that challenges cannot be asserted unless they were filed before Sept. 21.

"Cyrus' attempt to extract value for unsecured creditors where there is none by filing improper, unnecessary and duplicative actions with no prospect for success on the merits should not be condoned," the lender group said in the motion.

As a result, the first-lien lenders said they are asking the court to enforce the terms of the DIP financing order by dismissing Cyrus' lawsuit.

A hearing is scheduled for Oct. 15.

ION is a West Palm Beach, Fla.-based television broadcaster. The company filed for bankruptcy on May 19. Its Chapter 11 case number is 09-13125.

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