Not So Fast: Chicago Trib Still Hasn't Crossed Bankruptcy Finish Line

(Image credit: Getty Images via @daylife)U.S. Bankruptcy Court Judge Kevin J. Carey this week granted a stay of his confirmation order last month that would enable The Chicago Tribune to emerge from Chapter 11 bankruptcy (see "TUOL" post 7/16/12), but for the "time out" to continue, creditor Aurelius Capital Management ("ACM"), which is appealing the media conglomerate's reorganization plan, must post a $1.5 billion bond by August 29, the Tribune reports.

It's uncertain whether junior creditor ACM has the will or the way to rustle up the bond money to continue its appeal of the reorganization plan that gives senior creditors ownership of the Tribune Co. The conglomerate, which filed for bankruptcy in December 2008 (In re Tribune Co., Case No. 08-bk-13141), has  rung up more than $400 million in attorneys' fees wending its way through insolvency.

If the ACM appeal fizzles and the stay is lifted, the Tribune Co. must still garner FCC approval of its transfer of its television and radio properties, which include WGN-TV, to the new owners. According to the Tribune article, the conglomerate also must secure  $1.1 billion in debt financing and a credit line.

Don't Trib Over Yourself on the Way Out

Image via WikipediaExpect in mid-February to see more empty chairs in the Chicago Tribune newsroom as the embattled daily this week offered an unspecified number of voluntary buyouts, with all but senior editorial management eligible to apply, the paper reported Monday.

Whether applicants will receive a buyout depends on numerous factors, such as seniority, business goals and staff depth at various positions. Those accepted will receive two weeks base pay for their initial year of service and an additional week's pay for each year of service over and above that, according to the Tribune article. Career counseling and outplacement services also will be available to those who accept buyouts.

Currently mired in a three-year-old bankruptcy from which it is unlikely to emerge before the Third Quarter of 2012, Tribune management has not ruled out the possibility of layoffs even after the voluntary buyout program.

UPDATE: Blockbuster Video Lives to Rewind Another Day

Image by Chris Devers via FlickrBlockbuster, Inc, the Dallas-based video rental chain, narrowly dodged immediate liquidation last week, and instead, will be sold at auction, according to reports by Bloomberg News and legal Web site Am Law Daily.

Blockbuster sought Chapter 11 bankruptcy protection last September in federal bankruptcy court in New York (see "TUOL" post 9/23/10). Judge Burton Lifland accepted the public auction deal presented by lenders, including Monarch Alternative Capital LP. Judge Lifland also ruled that corporate marauder Carl Icahn may submit a bid for Blockbuster at the auction.

No date for the auction of the company founded in 1985 has been announced. "TUOL" wonders if there will be a penalty if the auction last more than 2 or 3 days. 

Borders Books Turn to Chapter 11

Image via WikipediaBorders Group, Inc., the Ann Arbor, Mich.-based entity behind Borders Bookstore, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York (In re Borders Group, Inc., Docket No. 11-10614).

Unable to compete with the online prowess of Amazon or the discounted prices of Walmart, Borders turned to Chapter 11. Its bankruptcy petition shows assets of $1.27 billion as against debts totaling $1.29 billion. Not surprisingly, among the company's largest unsecured creditors are publishing giants Penguin Putnam, Inc., $41.1 million; Hachette Book Group, $36.8 million and Simon & Schuster, Inc., $33.7 million.

While shielded by bankruptcy, Borders plans to reorganize the company and secure financing. Toward that end, the company purportedly already has lined up a $5 million-plus "debtor in possession" loan from GE Capital, according to a Wall St. Journal story. Reportedly, Borders plans to shutter 200 stores in the weeks ahead, roughly 30 percent of its locations.

Service was never Borders' strong suit, and  their limitless supply of animal calendars was disspiriting, but "TUOL" will miss the in-store cafe and occasional live entertainment.

Summit's Nadir

Image via WikipediaSaddled with $252 million in debts and unsecured claims, New York-based business-to-business publisher Summit Business Media Holding Co., has filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court in Delaware (In re Summit Business Media Holding Co., Case No. 11-10231), according to a Reuters article.

Summit covers the property/casualty insurance, life/health insurance, investment advisory and global mining and professional services markets through its 16 magazines, 20 Web sites and roughly 150 reference titles. The recession, heavy debt burden and ad revenues drying up are blamed for pushing Summit into bankruptcy.

Chicago-based private equity firm Wind Point Partners  presently holds 85 percent of Summit's equity. Summit, which has targeted the first half of 2011 for its re-emergence from insolvency, anticipates converting $188 million in senior secured debt into new loans totaling $116 million, enabling creditors to own 89 percent of equity in the re-organized company, according to the Reuters article.

Extra: Natl. Enq. & Star Scribes Cut--Staff Caught in Hot News Bureau Share

Image via WikipediaTwo Star Magazine writers and one National Enquirer reporter are the latest job casualties as circulation and financially beleaguered American Media, Inc.("AMI") continues to trim costs.

According to a report by WWDMedia.com, the two tabloids, which already share office space, are going to operate as an AMI news bureau, with New York-based editors doling out the celebrity scandal articles generated by the bureau between the two papers.  AMI filed a Chapter 11 bankruptcy in U.S. District Court for the Southern District of New York (In re American Media, Inc., 10-BK-16140) last November.(See "TUOL" post 11/17/10.)

Circulation figures for the supermarket tabloids remain flat, despite the continued presence of Mel Gibson and Michael Jackson's physician/pill dispenser.

Freedom: Just Another Word for Media Outlets to Sell

Image via WikipediaEight television stations and 100 newspapers, including flagship Orange County Register, owned by Irvine, Calif.-based Freedom Communications, Inc., are attracting suitors, according to an Associated Press story.

Freedom Communications, which emerged  in April from a Chapter 11 bankruptcy filed in September 2009, would not identify any potential buyers.

X-Posed: National Enquirer & Star Tabloids in Bankruptcy Love Nest

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As anticipated here [see "TUOL" post 11/2/10], Boca Raton, Fla.-based American Media, Inc., whose publications include the Star and National Enquirer supermarket tabloids, has filed for Chapter 11 bankruptcy protection in the U.S. District Court for the Southern District of New York (In re American Media, Inc., 10-BK-16140), according to Bloomberg News.

The publisher of the popular gossip tabloids listed assets of  under $50,000 against debts of up to $1 billion in its court filing.  The Enquirer's circulation as of September 2010, averaged 695,000, a drop of 83,000 compared to October 2009 figures, while the Star's  numbers during the same period saw a decrease to 940,000 from 1.1 million, according to Bloomberg.

MGM Files Chapter 11 Bankruptcy: The Lion Weeps Tonight

Image via WikipediaSpeaking of James Bond, Metro-Goldwyn-Mayer Studios, Inc., which owns the rights to the 007 film franchise, filed a voluntary petition for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York today.

The Am Law Daily blog reports that more than 100 MGM bondholders and lenders signed off on the pre-approved re-organization plan, which involves swapping a $4 billion debt for a 95 percent ownership stake in the film studio when it emerges from bankruptcy protection. The plan is for Spyglass Entertainment executives to oversee MGM's operations once the post-bankruptcy dust settles.

MGM hopes to raise $500 million and continue to churn out tv programs and films as a leaner and meaner post-bankruptcy company.  The studio is hopeful the court will okay the proposed re-organization within 30 days.

An effect of the 14-page bankruptcy filing is that it wipes out the ownership stakes of the consortium that presently owns MGM, including Comcast, Sony and a handful of private equity firms.

Ars Gratia Artis ("Art for Art's Sake") and all that, but a movie mogul has gotta eat.

National Enquirer Seeks Chapter 11 Protection: Space Aliens to Blame?

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If Demi Moore, Charlie Sheen, Mel Gibson, Courtney Cox and other Hollywood celebs have an extra bounce in their step today, it's probably because they read The New York Post story about National Enquirer parent company American Media's decision to seek Chapter 11 bankruptcy protection.


American Media, which owns Shape and Star, along with the Enquirer, previously planned a debt-for-equity exchange, but instead has opted for a pre-packaged Chapter 11 re-organization plan.  Key bondholders Capital Research, Avenue Capital Management, Angelo Gordon & Co. and the Oppenheimer Fund, along with fellow bondholders, who are owed upward of $355 million in total, are likely to wind up with a 95 percent controlling interest in American Media Stock, according to the Post story.


The Chapter 11 filing is two weeks away, and the tabloid owner is expected to emerge from bankruptcy within 60 days after filing, according to the Post.  Meanwhile, Enquirer editors are keeping their fingers crossed that another John Edwards or Michael Jackson story is just around the corner.

Blockbuster Busted--Files Chapter 11 Bankruptcy

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Dallas-based movie rental chain Blockbuster, Inc.(NYSE: BBI, BBLB) has filed for Chapter 11 bankruptcy in U.S. Bankrutpcy Court in New York.
As reported by AmLaw Daily (http://amlawdaily.typepad.com/amlawdaily),  the company lists assets of $1.02 billion and debts of $1.46 billion. According to AmLaw Daily, lead bankruptcy counsel Weil, Gotshal & Manges may oversee a fairly speedy Chapter 11 reorganization, as sufficient senior creditors purportedly are on board regarding an agreement that would reduce the company's debt by 90 percent, with principal senior lenders exchanging debt holdings for equity in the restructured company. Major debt holders include Twentieth Century Fox Home Entertainment and Warner Home Video, Inc.
Blockbuster, founded in 1985, provides in-home movie and game entertainment through more than 7,000 stores worldwide, roughly 3,000 of which are in the U.S. Netflix, Inc. has taken a large chunk of Blockbuster's business.
"TUOL" is on the lookout for a new microwave popcorn source and for old time's sake, may fine itself after a three-day period.

2d Circ.: Bankruptcy Law Doesn't Stifle Attorney's First Amendment Rights

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In Diana G. Adams, U.S. Trustee Region 2  v. Zenas Zelotes, Esq. (Case No. 07-1853cv), the United States Circuit Court of Appeals for the Second Circuit this week ruled that a Bankruptcy Code Provision [11 U.S.C. sec. 526(a)(4)] did not violate the First Amendment freedom of speech rights of attorney Zenas Zelotes.

Citing the March 8, 2010, decision of the U.S. Supreme Court in Milavetz, Gallop & Milavetz v. U.S. (Docket Nos.  08-1119, 08-1225), the Second Circuit reversed the trial court ruling. Zelotes alleged the  bankruptcy court provision at issue that prohibits debt relief agencies from advising clients to assume additional debt in contemplation of filing for bankruptcy violated his First Amendment right to advise clients freely.

The appellate court cited the Supreme Court's Milavetz decision that said the Bankruptcy Abuse Prevention and Consumer Protection Act should be interpreted narrowly as prohibiting debt relief agencies and attorneys from emboldening clients to "load up" on debt before filing for insolvency with the expectation that the debt would be discharged by the bankruptcy.

Tribune Co.: Bankruptcy Is Expensive

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According to reports in The Chicago Tribune and The Am Law Daily Web site, more than $138 million in legal fees have been racked up since The Tribune Co. filed Chapter 11 bankruptcy reorganization proceedings 15 months ago, and an irate group of bondholders is asking a court to order banks that backed the leveraged buyout plan in 2007 that enabled former owner Samuel Zell to take the company private to repay $25 million used to cover the banks' legal fees.

A Tribune Co. subsidiary that did not file for bankruptcy covered the legal fees of banks involved in the Tribune LBO, which skirted the requirement that the bankruptcy court ok payments for professional fees. The $138 million in attorneys' fees represents about 25 percent of the media conglomerate's 2009 cash flow. U.S. Bankruptcy Court Judge Kevin Carey last year admonished attorneys involved in the case for hourly billing rates exceeding $1,000. Observers note that bankruptcy rates have risen roughly 10 percent annually over the last decade, and insolvency proceedings involving major corporations, such as Enron, United Airlines, and Lehman Bros. are costly affairs, so the legal fees to date for the Tribune bankruptcy are not out of line. Still, that's a tough case to make in view of one law firm that has billed the Tribune bankruptcy trustees $110,000 in photocopying costs.

[Off the] Air America Media Dissolves

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 Air America Radio debuted in 2004 as a progressive network alternative to Rush Limbaugh, G. Gordon Liddy, and other conservative stalwarts dominating the airwaves and chronicled in Hot Air by Washington Post Media Columnist Howard Kurtz.

Although never dominant, Air America at its height had more than 100 radio outlets across the nation and boasted established "names" including now-U.S. Sen. Al Franken (D.-Minn.) and actress/comic Janeane Garofalo, and soon-to-be stars such as Rachel Maddow.

It all came to a crashing ending this week as Air America Media ceased live programming Jan. 21 and will disappear from the airwaves entirely Jan. 25 as it undergoes Chapter 7 bankruptcy dissolution. Ownership blamed the dramatic drop in local and national advertising revenues that has plagued the industry as a whole, but Air America's history was turbulent before the nation's recent economic downturn. 

Air America filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York in 2006 and soon after, was purchased by Green Family Media.  Full-time employees with more than 6 months' tenure will receive severance packages.

Other notable hosts over the network's brief six-year existence included Ron Reagan, Jr., "Lionel", Jerry Springer, Joy Behar, and Richard Belzer.

Liberal listeners will have to make do with NPR, and oldies, jazz, and classical stations.

MediaNews Group's Colorado Rocky Finances

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The insolvency beat goes on for ad revenue-strapped, circulation-starved newspaper conglomerates with the announcement that  Denver-based MediaNews Group, Inc. ("MNG") will shortly file a pre-approved Chapter 11 bankruptcy.

The financial restructring plan, which affects Affiliated Media, Inc., an MNG holding group, will give lenders an 80 percent ownership stake in the entity and leave current management intact, though shareholders will lose the value of their holdings. In return for the 80 percent equity, principal lenders, headed by Bank of America, will reduce MNG's existing debt to $165 million from its current approximate $930 million. Reportedly, 95 percent of the media giant's lenders and 91 percent of its bondholders have signed off on the restructuring plan.

The proposed bankruptcy package does not involve individual MNG newspapers, just the Afilliated Media holdings. Among MNG properties are The Oakland Tribune, The Berkshire Eagle, The Salt Lake Tribune, The St. Paul Pioneer Press, The Detroit News, and The Denver Post.

Morris Publishing Group Bankruptcy Bound

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Augusta, Georgia-based Morris Publishing Group, which counts The Augusta Chronicle and The Florida Times-Union among its 13-daily newspaper empire, plans to file a pre-packaged Chapter 11 bankruptcy next week after it was unable to secure approval from 99 percent of its creditors to a debt swap.

Morris seeks to secure $100 million in new notes to retire an outstanding $278 million debt. If the bankruptcy court approves the plan, the existing debt will be extinguished and creditors will receive a share in the $100 million debt.

Other Morris dailies include The Juneau (Alaska) Empire, The Topeka (Kan.) Capital-Journal and The Savannah (Ga.) Morning News. The company also publishes weeklies, magazines and shoppers.

Open Heartland Surgery: Newspaper Chain Files Chapter 11 Bankruptcy

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Citing "significant liquidity challenges" and "weakened operating results," Heartland Publications LLC, which publishes 23 daily newspapers and nearly as many weekly and free papers in nine states, has filed a pre-arranged Chapter 11 bankruptcy in U.S. Bankruptcy Court in Wilmington, Delaware.

In its bankruptcy petition, Heartland listed roughly $134 million in assets and $166 million in debts. Revenues are projected to be nearly 12 percent lower than 2008 results.  Heartland employs 800 full-time and part-time employees and vows to continue its publications in Georgia, North Carolina, Kentucky, South Carolina, Tennessee, West Virginia, Virginia, Ohio and Oklahoma.

Heartland's principal creditor, GE Capital, agreed to reduce the debt owed it to $70 million, from $111 million, in return for a  90 percent ownership stake in the media conglomerate. The year-end proliferation of bankruptcy filings by media groups is sad, but apparently not enough to break your Heartland.

Citadel Broadcasting Corp. Fortress Breached by Bankruptcy

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Citadel Broadcasting Corp., the nation's third largest radio group, has filed a pre-arranged bankruptcy approved by more than 60 percent of its creditors in U.S. Bankruptcy Court in New York.

Citadel, which owns 165 FM stations and 58 AM stations in 25 states, stated in its bankruptcy petition $1.4 billion in assets and $2.5 billion in debts. Its three largest unsecured creditors include The Walt Disney Co., JPMorgan Chase, and Wilmington Trust Corp.

Citadel syndicates ABC News Radio, "The Huckabee Report," and "Imus in the Morning," among other programming. Under the agreement with creditors, Citadel reduces its $2.1 billion in loans to roughly $762 million in return for secured creditors owning 90 percent of the equity of the re-organized radio giant. Citadel amassed huge debt in 2006 to complete the purchase of ABC News Radio from Disney, after which radio advertising began to spiral downward.

Triple Crown Loser

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Triple Crown Media, Inc., publisher of one weekly and six daily newspapers in Georgia, including the Gwinnett Daily Post and The Albany Herald, has filed for Chapter 11 bankruptcy.

Under the debt restructuring plan, Triple Crown would shave nearly a third of the $35 million owed to second-lien lenders. The Lawrenceville, Georgia-based media conglomerate filed for bankruptcy in the U.S. Bankruptcy Court in Wilmington, Del. (Case No. 09-13181).

The news comes the same day as The Atlanta Constitution, Georgia's largest daily newspaper, hiked its newstand price to $1 for Monday through Saturday editions to offset sagging advertising revenues and declining circulation.

Bankruptcy for Financially Squeezed Orange County Register Looms

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Irvine, Calif.-based Freedom Communications, which owns eight television stations and 31 daily newspapers, including The Orange County Register, is expected to file Chapter 11 bankruptcy this week, handing control over to lenders who hold approximately $770 million in debt.

The Register has an average daily circulation of 230,877 and Sunday sales of roughly 300,000 for the six months ending March 31, 2009, according to the Audit Bureau of Circulations.  The Hoiles family has been majority owners of Freedom Communications for more than 70 years.

Freedom suspended its dividend a year ago and in June 2009, announced an across-the-board 5 percent salary reduction for employees.