A federal judge in Kansas has dealt a blow to an attempt by Allied Media Partners (AMP) to recoup a $300,000 deposit it paid Rocking M Media for a sale that never closed. U.S. Bankruptcy Judge Dale Somers says AMP failed to demonstrate an error was committed justifying the November 2024 decision be set aside.
“AMP may take issue with the substance of the testimony or documentary evidence forming the basis of the Court’s findings, but disagreement is not grounds for setting aside findings of fact,” Somers writes in the 17-page decision released this week. He says the initial ruling was “based on the plain language of the contract’s relevant provisions” and the issue of the need for the FCC approvals and impending license expiration were addressed at length during trial through witnesses’ testimony and exhibits.
Because AMP failed to show any error, Somers also denied its request for a new trial. Somers did give AMP a small win, however, in agreeing to leave open the potential of adding additional evidence and testimony under the bankruptcy process.
The fight between the two companies dates to April 2019, when AMP agreed to buy six Kansas stations for $6.2 million, saying its goal was “to bring radio back to the grassroots level.” But the sale cratered six months after it was announced when AMP said it was unable to secure financing and the company was closing its doors. Rocking M quickly filed suit seeking permission to hold onto the $300,000 deposit.
But AMP — a partnership between Wichita radio veteran Tommy Castor and Matt Baty, a former athletics director at the University of Kansas — filed a counterclaim. It alleged Rocking M was at fault for the deal’s collapse, arguing its deposit should be returned along with other damages. It alleges that Rocking M didn’t include in its contract the need for AMP to assume $1 million of debt obligations, “perpetually” employ individuals, and run a training shop.
In December, the court sided with Rocking M, which got to keep the $300,000 deposit as well as any interest that has accrued. Somers ruled Rocking M didn’t violate the terms of the sale contract, and instead AMP breached its terms when it failed to agree to a closing date and to participate in a closing before the expiration of the FCC consent to the transaction.
AMP appealed that decision in January, saying Somers either misinterpreted the sales contract between the two companies or made a legal mistake. In either case, it had sought a new trial so it may present additional evidence and testimony related to the sale.
Creditors May Get The Money
The fate of the money has been in limbo ever since Rocking M filed for bankruptcy in March 2022. AMP filed claims in the bankruptcy case telling the court it was owed $25,640,000 based upon alleged breach of contract and misrepresentation. That includes $23 million for breach of contract, $250,000 for misrepresentation, the $300,000 deposit, as well as $90,000 in interest. But Somers has limited the case to simply the deposit money currently sitting in the bank.
If Rocking M proves successful, the $300,000 deposit money is unlikely to go to company founders Monte and Doris Miller. They have already sold off all of their radio stations in a bankruptcy auction that brought in $2.71 million.
Instead, creditors are angling to recoup more of what they are owed. The official committee of unsecured creditors hired the legal heavyweight Manatt to lead their efforts. The group represented by Manatt would be the beneficiaries of any recovery.