A federal judge on Friday gave Emmis Communications Corp. the green light to proceed with a shareholder vote that could wipe out $34 million in unpaid preferred shareholder dividends.

The Friday decision from U.S. District Judge Sarah Evans Barker in Indianapolis rejected a plea from Corre Opportunities Fund LP and other preferred stockholders asking her to block the vote. They argued that Emmis board members and Chairman Jeff Smulyan failed to comply with state and federal disclosure laws.

But Barker disagreed, denying Corre’s request for an injunction to prevent Emmis from conducting the vote originally set for Aug. 14. A future date has not been set.

“[Emmis has] shown a likelihood that, if an injunction were to issue and the vote be enjoined, both Emmis’s stock price as well as its efforts to refinance before the November 2012 deadline could be seriously and adversely affected,” Barker wrote.

Emmis is attempting to move ahead with a plan to reduce debt and stabilize its financial condition.

With a market capitalization of about $85 million, Emmis has more than 41 million shares of stock outstanding, 2.8 million of which are preferred shares whose holders are currently entitled to automatic dividends.

Those dividends, worth 6.25 percent of the preferred shares’ $50 liquidation value, or $3.125, haven’t been paid since October 2008, the investors said in a court filing. Including those unpaid dividends, each preferred share is worth $62.12, according to a June 29 proxy statement and meeting notice.

Other proposals on the ballot included elimination of future preferred dividends unless declared and, with that, the abolition of preferred stockholders’ ability to elect two members to the Indianapolis-based company’s board as long as there are arrears.

All of this, Corre alleged in court papers, is a prelude to Smulyan’s attempt to take the ninth-biggest U.S. radio station operator private.