Sirius XM Radio's chief executive may lose his job if the company chooses to file for bankruptcy protection.
A group of creditors tells The Wall Street Journal that it will seek the removal of CEO Mel Karmazin if the company chooses bankruptcy over a deal with an investor that would allow it to remain solvent.
"Creditors will act quickly and definitively if they perceive that management is acting in their own interest and not in the best interest of the estate," Edward Weisfelner, a partner with Brown Rudnick, the law firm representing the creditor group, told the newspaper. "The board of directors should carefully consider the ramifications."
The company is reportedly meeting this weekend to determine a course of action, with a final decision expected as early as Monday.
Sirius is staring at a significant debt crisis. According to a story that appeared on Yahoo Finance, financial research firm Moody's "thinks there's a 'high likelihood' that Sirius will fail to repay or refinance its debt in 2009." And that debt is reportedly coming due Tuesday.
If the company does file for bankruptcy, the creditors could petition the court to have Sirius' management removed and have the company placed under the stewardship of an independent trustee.
Sirius has been rumored to be seeking some sort of an investment from Liberty Media, which controls DirecTV, according to several media reports quoting anonymous sources close to the matter. A deal between the satellite radio giant and the largest U.S. satellite-TV provider could help Sirius fend off bankruptcy and an unsolicited takeover attempt from satellite company EchoStar, which has bought up Sirius' debt.
The company is also rumored to be mulling a bankruptcy filing to pressure Charles Ergen, the satellite-TV magnate who recently bought up most of Sirius' debt, to make a formal offer for the company.