Bondholders say Spanish-language broadcaster LBI Media Inc.’s bankruptcy-exit plan is a product of insider trading and fraud, a violation of the rules of engagement in a market where aggressive trades are the norm, WSJPro reported. LBI denies the allegations, as does HPS Investment Partners, the fund that is poised to take over the broadcaster, which runs radio and TV operations in most of the country’s major Spanish-language markets. The claims from bondholders led by Caspian Capital LP and York Credit Opportunities Fund LP appeared in a court filing Monday. They will be tested in a confrontation next week in the U.S. Bankruptcy Court in Wilmington, Del., where LBI filed for bankruptcy protection in November. Privately held LBI is owned by the family of Chief Executive Lenard Liberman, but its debt securities trade in the public market. Bondholders say that means the normal securities-trading rules apply, and the company broke the rules by allegedly providing inside information to HPS. LBI says it needed rescue financing and followed standard market practices to get it from HPS. There was no insider trading, HPS’s lawyers have said, and the LBI deal was typical in a market where players are sophisticated hedge funds.
