PACIFICA UPDATE: “So I think we may need $150K or more soon…”

Those words by Bill Crosier, Interim Executive Director of the Pacifica Foundation, are a small hint of the angst behind the scenes at public media’s most embarrassing and dysfunctional organization.

Last Tuesday, in our post about Pacifica’s possible options to deal with an estimated $2.4 million debt to the Empire State Building (ESFT), we wrote that the most likely outcome. Pacifica will do nothing at all and will let larger, more competent, forces outside of Pacifica determine its fate.

That is still our impression. In an email to Pacifica’s employees, Crosier lays out the same options we cited on Tuesday but says he needs to get Board approval before acting. Here is Crosier’s message to the troops:

Bill Crosier

It's true that a few weeks ago, after the judge issued his decision in the ESRT case about the unpaid WBAI tower rental, chapter 11 bankruptcy was looking more likely. We knew that if we had to file ch. 11 in order to prevent ESRT from seizing assets, we would need at least $150K for just paying a retainer to get a bankruptcy filing started.

Since then, Sam Himmelstein [Pacifica’s lawyer] has urged us not to panic, and we are hoping to avoid having to file for bankruptcy.

Chapter 11 bankruptcy does have certain advantages (including stopping collection activities by ESRT and any other creditors, and giving us more time), but it also brings additional significant costs and difficulties.

We have started the process for applying for a loan, using a building [reportedly KFPK, Los Angeles] as collateral. It may take a couple of weeks to get the loan approved, and after that the PNB will still have to approve the actual loan. [our emphasis added]

A loan cannot be the whole solution to the ESRT tower lease problem, though, because a loan will have high interest payments because of our bad credit and because it just refinances part of the debt.

We need more than just the minimum needed to pay the judgment. The loan will NOT provide enough funds for all this. Plus we have several million more of other debt, but just let me address the above for now.

We are looking for frequency swaps, for WBAI or WPFW (not both) to provide funds that won't have to be paid back.

But either a frequency swap or selling buildings may take time to finalize, and it became clear that if we don't have to file for bankruptcy, we are likely to need the loan more for some of the other obligations noted above, so we don't end up back in court in a few months.

So I think we may need $150K or more soon, whether we use it for a retainer for bankruptcy (again, which I hope we can avoid), or for paying interest on a loan that we may need very soon.

But both Sam Agarwal and I want everyone to know that perhaps the worst thing to do would be to get a loan using a building as collateral without a decision by the PNB on exactly how we're going to pay back the loan. [our emphasis added]

It would be dangerous to risk losing one of our buildings to foreclosure in a few months when we can't make the interest payments, or at the end of the loan if we can't pay back the principal.  If that happens, we'll probably be in bankruptcy anyway, but with an additional problem that we don't have now (loan in default).

Bill

THE PROBLEM IS PACIFICA’S NATIONAL BOARD

As highlighted in Crosier’s memo, he feels unable to make a decision without the Board’s approval. But Pacifica’s Board is the heart of the problem. Based on the conversation I overheard with a consultant and members of the Pacifica Board, a speedy decision appears unlikely.

Some members of the Board seem to want to drag out the status quo.  Even Crosier seems in denial. But time is of the essence.

Before the end of November ESRT can begin seizing Pacifica’s money and other assets. So, this is truly Bill Crosier’s moment of truth.

Pacifica’s problems are not about politics or personalities. They arise from Pacifca’s incompetence and disregard for broadcasting in the public’s interest.

Folks I have spoken with call Crosier a smart and kind person who cares about social justice. Also, they say he is easily intimidated by other people and often agrees with the last person he has spoken with. Plus, Crosier displays only pedestrian knowledge of the business of radio broadcasting.

Now Bill Crosier can either dither or take executive action. His decision will determine his legacy.

So what do I think will happen? Nobody knows for sure but here is my guess: One year from now 99.5 FM will be airing K-LOVE, a Christian Contemporary format.