Chief U.S. Bankruptcy Judge Stephen Raslavich, recently approved a plan for Philadelphia’s largest newspapers to see life after bankruptcy protection, contrary to mounting objections from various employee pension officials.
The judge later said the plan is “in the best interest of creditors… (and is overall) a noteworthy achievement” in the shadows of what has been a more than lengthy battle of legalities. “We’re very pleased,” said Philadelphia Newspapers Inc.’s lawyer, Larry McMichael. Philadelphia Newspapers Inc. filed for bankruptcy last year. McMichael continued, “…This has been a difficult case from the outset, but one of tremendous public importance.”
Philadelphia Media Network Inc. will take over The Philadelphia Inquirer, the Philadelphia Daily News and www.philly.com when, according to the plan, the sale officially closes—projected for sometime around August.
Recently, on the basis new owners would not have to adopt any of the outgoing company’s obligations, lawyers for employee pension funds heartedly objected to the reorganization plan. These attorneys project a financial blow which would wreck havoc on any retiree payments down the road.
Judge Raslavich sided with the new owners and found them to have no inherited ties to any pension plans, saying the likelihood of a sale with a $174 million liability price-tag on its side, was slim to none and further made mention of the funds’ lawyers’ lack of objection—prior to auction.
The newspapers employee nearly 2,000 full-time and 2,500 part-timers, and a great majority of them are unionized. Therefore, Philadelphia Media Network Inc. will have to generate new contracts with its adopted employee’s unions to help finalize the sale. The creditors’ lawyer, Fred Hodara, says there has been “real progress at the table.”
Back, around four years ago, local Pennsylvanian investors bought both papers for roughly $515 million. Overtime, as is the trend in any kind of publishing these days, the investors watched the drop in revenues. Later, and as recently as this past April, Credit Suisse, Angelo Gordon & Co., and other creditors attended an auction and bought the papers for $139 million.