. . . Vladimir & Estragon, sitting silently, gazing out across the ocean . . .
Two associated posts will soon follow:
• given the evidence of FJC auditor’s reports for FY2019 & 2020, has FJC sold the $3.265m loan?; &
• given evidence from FJC, Pacifica, & its FY2018 auditor’s report, has the loan been extended from 2Apr2021 to some day in Sep2021?
There will also be a post explaining why the current application for an Economic Injury Disaster Loan (EIDL) is likely to fail given:
• the lending criteria of the SBA, the Small Business Administration;
• recent reports by its Inspector General on SBA lending decisions; &
• Pacifica’s financial performance – not since the recent past, 30Sep2016, the last date of audited financial statements, but since the deep past, 30Sep2006, a full 10 years earlier.
IT IS FORBIDDEN TO READ THIS POST WITHOUT BEING ACCOMPANIED BY THE ANTHEM OF PACIFICAWORLD. THANK YOU FOR YOUR FORBEARANCE. YOU MAY NOW CONTINUE.
F2Apr next year is a big, big day for Pacifica. That’s the latest day it’s contracted to hand over $3.265m to the Foundation for the Jewish Community, operating as FJC.
Pacifica, in the 2½ years since the loan was taken out, has never made a public statement as to how it’s going to do this.
But that’s not the worst of it: the public behaviour since Apr2018 of the Pacifica National Board & six executive directors (Livingston, Jackson, Aaron, Vernile, Reyes, Brazon – LJAVRB) has consistently neglected the matter in hand. Moreover, there’s been no push from the local station boards – occasional grumblings, but never enough to even meld into a motion. Not only has there never been a vote on a relevant motion during a public session of any Pacifica board or cttee, there’s never been a public Pacifica discussion of what options are available – even worse, there’s never been an exploration of what they could be. And never a mention in a public report from the private Pacifica sessions.
So no director has ever brought a motion, either to their local station board or the PNB. And each director, by law, has, in the jargon, a fiduciary duty, a duty to act in the best interest of the organisation. A director, by law, can’t be an ostrich.
Yet this is so.
Enter, stage left, as many DeWaynes as one can stomach, discursive DeWaynes, bombastic, hyperbolic, hyper-hectoring, the PacificaWorld incarnation of those irritating, pompous-sounding but sadly true epithets, all entering to stride the stage: egregious . . . negligent . . . dereliction . . . in a phrase, the refusal by each & every director to discharge their fiduciary duty.
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Only some of the directors are fresh to the fire. Others constitute the inner circle, & it’s not known publicly why these specimens have continually failed to discuss in public how this $3.265m could be raised. (An alternative is persuading FJC to extend the loan, changing the maturity date of the contract.) In the two-year period thru to 2Apr this year, one can assume the failure was Being Homer: cognitive myopia, an inability to think that far ahead. But silence during the last six months? That’s a lil more difficult to explain. Having seen off the breakers in the March referenda, wasn’t that the time to seize the initiative, start afresh, set a new tone? OK, the US COVID-19 epidemic had just grabbed the attention, soon followed by a collapse in Pacifica income, but surely this made it even more urgent to sort out where the $3.265m is coming from? But no. In PacificaWorld, failure is utter.
But the prime responsibility lies with ED Lydia Brazon, in post since 5Dec2019. Her job is to deal not just with the present, the firefighting, but with the future, especially with known problems like finding a multi-million sum by a known date: The Mi$$ion. So, existentially, the Pacifica mission reduces to The Mi$$ion. Why hasn’t she hired someone both to list the kinds of options & to identify concrete options, the possible courses of action? Scenarios that she can then present to the Board for decision?
It’s not her job to await instruction from a floundering PNB. She’s known the obvious from the beginning. And its urgency.
The puzzle is why she’s delayed, & why not even one director has moved to correct this. Why no pressure put on ED ‘Fabiana’?
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As it stands, according to the co-signed FJC loan agreement, Pacifica has identified two concrete ways to pay FJC:
“a swap or sale of one or more radio licenses or a sale of other Pacifica owned assets”(Recital B, page 1, added emphases; page 2 of the PDF https://mega.nz/#F!PloCiSqJ!9rLejSkttE7gCVCCq3q86g?b0IBlaiR)
This sentence ended with a third option, a Pacificaesque, a catch-all in the abstract, the ever-dependent Micawber: “[…] or such other sources that will become available”. Gotta luv it, babi.
. . . courtesy of Sol Eytinge, Jr . . .
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All this, whilst a variant of the Godot theme prevails: time waiting for no-one . . .
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The PNB and iED is not “refusing to tell us how FJC will be paid its $3.265 Million by the due date of April 2, 2020”. They have no plan to tell us about.
Someone in the industry I know told me their theory that a shrewd investor might approach FJC before that date to “buy the paper” (like mortgage companies buy mortgages from each other) from FJC, so they could then effectively foreclose on the loan–the conditions of which have not been met by PNB–and end up owning valuable real estate and all five radio stations–including two stations in major markets that together could have a collective market value exceeding $100M.
This would be similar to investment firms that buy distressed companies and then sell off their assets for more money than the company is worth whole.
I think this theory is plausible. If I had hundreds of millions of dollars, I’d buy FJC’s paper on that Pacifica loan in a heartbeat. I wouldn’t sell off the assets, though. I’d try to turn it into a more effective and sustainable progressive radio network without the carnival of clowns who are running it now.
That vulture investor is unlikely to walk away with $100M in assets. Pacifica could (and probably would) file for reorganization under the bankruptcy code. That would allow Pacifica to keep operating while selling assets – the most likely asset is the WBAI radio license. It’s the middle of the dial in one of the largest media markets in the US, so it would be enough to pay off the holder of the paper and perhaps enough to buy a lower frequency in the NYC market.
Hi, Dan, thanks for your comment.
First, you say “Pacifica could (and probably would) file for reorganization under the bankruptcy code. That would allow Pacifica to keep operating while selling assets”. Thing is, filing for bankruptcy constitutes “an Event of Default under the Loan” according to the FJC loan agreement, Section 8.8, because it would be the making of a petition under “bankruptcy, insolvency or other similar law” (pp. 14-15; pp. 15-16 of the PDF). https://mega.nz/folder/PloCiSqJ#9rLejSkttE7gCVCCq3q86g/file/b0IBlaiR
And the remedy for FJC that Pacifica has agreed to? “[A]ll amounts due under the Loan Documents immediately shall become due and payable, all without written notice” (Sec. 9.1, p. 15, emphases added; p. 16 of the PDF). So no time for “reorganization”, as you put it. Just the fire sale of a PNB-agreed mix of the land & buildings in Berkeley, LA, & Houston.
Second, you claim re a sale, that “the most likely asset is the WBAI radio license”. Why? Of the five, why WBAI? What is your reasoning, & evidence? Perhaps given the contractual imperative just noted, you’ll agree that a FCC broadcasting licence is besides the point.
(Please note, holding a FCC licence is a permission of usage granted by the FCC, & isn’t the property of a broadcaster. That’s why licences don’t appear in a broadcaster’s balance sheet, & why they can’t be used as collateral for a loan. And any change re a licence has to be with the FCC’s agreement. So, only colloquially is a licence said to be owned by the broadcaster.)