Ion Media has obviously been dragging its feet around for too long and finally did the right thing by filing for Chapter 11. It had been postponing interest payments on a series of corporate bonds for as long as I can remember. In essence, it was not only cheating its bondholders, but also itself.
Whilst it was commendable that they tried to continue operating with all the financial burden they were going through, they should have just ripped the bandaid right off in the first place. Now, we've got to wait another 1.5 - 2 years to see how this all plays out. A hedge fund is implicated, so why do I get the suspicious feeling that there will be a lot of legal and financial hypocrisy ensuing in the near future?
I did only pay about $0.3 on the dollar for these bonds, but lament the fact that they're only subordinated notes.
People and companies should just do the right thing all the time. Whilst bankruptcy is not an especially honourable route to take, in this case, it was evident far back in Ion's timeline that it was probably the only unexhausted and realistic solution.
To those that feel that it is naive of me to expect junk bond issuers in general to actually pay interest as well as repay the principal at maturity (i.e. E*Trade), I would just like to point out a promise is a promise. Maybe it is naive of me, but it doesn't make defaulting any less wrong.
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