Community radio station KDHX had less than $7,000 in cash at the end of January and is "actively looking at” selling its assets as it nears a potential bankruptcy filing, an attorney for the station said in a court hearing Thursday.
“The organization is two steps from bankruptcy. They cannot pay their creditors,” John M. Reynolds said in a St. Louis Circuit Court hearing. “Running the station costs money, even if the volunteers are free. And money is the one thing they don’t have.”
The station laid off three of its six staff members on Jan. 31 — the day it dismissed almost all of its volunteers and stopped live broadcasting – and cannot let volunteers continue to use its Grand Center studios because insurance on the building expired that day, Reynolds said.
The 37-year-old community radio station had a $1.2 million annual budget as of fiscal 2023. Executive Director Kelly Wells received a $106,082 salary that year.
Reynolds was defending the station against a motion filed by former KDHX DJs asking a judge to issue an emergency injunction or temporary restraining order that would restore the dismissed volunteers’ membership with the nonprofit. This status includes voting rights for some board of directors elections and on major issues like a possible sale of KDHX’s broadcast license.
Radio station leaders dismissed about 120 volunteers on Jan. 31. Reynolds, for the first time, revealed how many volunteers retain their member status in addition to the board of directors: one or two.
The organization has nine remaining members, including the board, he said. The board has eight members, one of whom was seated as the result of an out-of-court settlement but suspended after the first meeting. It’s unclear if that board member was included in the tally of remaining members.
“There’s bad faith all over this,” plaintiffs’ attorney Benjamin Askew said of the dismissals, arguing there was no “fair and reasonable” process as required by state law. KDHX leaders dismissed its volunteers to remove their voting status and exert unchallenged control over the station’s operations as its immediate future is in danger, Askew argued.
Reynolds countered that the volunteers were dismissed simply because the station no longer needed them.
KDHX leaders are holding an annual meeting on Tuesday evening, where members would typically participate in any votes that may arise. Reynolds said there would be no votes. If station leaders want to sell their broadcast license, two-thirds of associate members participating in the vote would need to approve.
With KDHX’s current member total, that equals six people.
If the court orders KDHX to hold individual appeal hearings for all of its former members, Reynolds argued, the process would be “immensely expensive” and possibly prevent station leaders from selling assets before entering bankruptcy and then being forced to part with its assets in “a fire sale.”
Judge Joan Moriarty did not immediately rule on the plaintiffs' request for an injunction.
