NEW YORK, May 16 (Reuters) – Vice Media on Tuesday received court approval to borrow $5 million to fund the bankruptcy, saying it will use the money in part to pay freelancers and prepare the company for a sale.
U.S. Bankruptcy Judge John Mastando said at a hearing in Manhattan that he would allow Vice to borrow additional money from its existing senior lenders, a group that includes Fortress Investment Group, Soros Fund Management and Monroe Capital (MRCC.O).
Mastando said he would approve the first $5 million of the loan within a day, and would consider Vice’s request to borrow another $5 million in June.
Vice attorney Kyle Ortiz said approval of the bankruptcy loan would also unlock $20 million in a frozen bank account, as part of the lenders’ agreement to fund Vice’s bankruptcy. Vice will have more than enough money to pay $2 million in freelancers and other pressing operational costs, Ortiz said.
Vice was among a group of fast-growing digital media companies that courted millennial audiences and once boasted wealthy valuations. Along with contemporaries like Buzzfeed, Vice stumbled as ad revenue fell and interest rates rose.
The company’s bank account freeze, which took place last week, accelerated its path to bankruptcy after previous setbacks, including missed growth targets, the shutdown of the “Vice News Tonight” television broadcast and corporate layoffs, Ortiz said.
Vice’s bank, JPMorgan Chase (JPM.N), froze a large account due to competing creditor claims filed May 10 by Wipro (WIPR.NS), a tech services firm, and by the Fortress lender group providing Vice’s bankruptcy loan .
Wipro recently won a $9.9 million judgment against Vice in an arbitration over a canceled services agreement, and filed a restraining order against JPMorgan. Fortress’ lenders said they had more rights to the money, as Vice’s senior lenders, leading JPMorgan to freeze the account until the matter could be cleared up, according to Vice court documents.
The Fortress lender group, which owed $474.6 million, is pushing Vice to a quick sale in bankruptcy and has offered to buy the company at a valuation of $225 million.
Reporting by Dietrich Knauth; Edited by Alexia Garamfalvi and Marguerita Choy