Magazine article Editor & Publisher

The Final Deadline?

Magazine article Editor & Publisher

The Final Deadline?

Article excerpt

United Press International may be facing its final deadline; but then, again, this is UPI.

On the afternoon of May 12, when the assets of UPI are to be auctioned in court in Rutland, Vt., the 85-year-old wire service will either be sold intact or in pieces. Anything that is not sold will be liquidated.

UPI asked Judge Francis G. Conrad for an auction date before May 15, the next time staffers get paid or it would "have to cease operations due to an inability to meet its payroll."

Company executives reportedly told staffers that UPI projections showed it could meet payroll through that date.

The hearing will be held in Vermont because that is where Conrad -- who has president over earlier motions on this case in New York City -- is based.

Creditors committee attorney Dennis O'Dea, however, said the creditors, while pleased the company will finally be put up for sale, were not happy with the location nor with the speed with which the auction had been planned.

O'Dea said the creditors suggested months ago that UPI hire a professional auctioneer who could set a proposal for the best way to market and auction the property.

Further, he wondered why UPI was "so insensitive to public relations" by painting such a dramatic and desperate picture of the company it is trying to sell.

As E&P went to press, the creditors committee and UPI were planning to discuss the details of the auction setup and resolve other questions.

"We do, of course, have the recourse to object, but we don't want to destroy a viable auction," said O'Dea of Keck, Mahin & Cate in Chicago. "We do want to see the company offered for sale, but we're troubled that when UPI does" agree to an auction, it does so in such a dramatic fashion.

Although UPI, which has been operating under Chapter 11 bankruptcy protection since Aug. 28, 1991, has been on financially precarious turf for years, documents filed in support of its motion for an auction paint a bleak fiscal picture.

"[T]he value of the debtor's business as a going concern, as well as the vaue of its assets, including its name, is diminishing in value and, if the sale procedures suggested are not approved, the assets will be further diminished in value," UPI stated in its legal papers.

"It is clear that, unless the assets are sold and such sale is approved by this court, the value of the assets will continue to decline as the debtor continues to incur administration expenses and operating losses. The sale of the assets is the sole course of action available to the debtor and its creditors."

Formers statements from UPI managers have indicated the company had hoped to break even at least sometime in 1992 -- some even guessed within a month or so -- but now its filings say UPI "has been unable to cut out all operating losses and it projects that operations, on a cash flow basis, may break even in 1993."

Further, according to the legal documents, by late April or early May, UPI may not be able to meet its ongoing administrative costs.

These financial projections are not a complete shock, since UPI said in a March 4 hearing on extending the exclusively period for filing a reorganization plan -- which was rejected -- that it was losing $150,000 a month and had only enough cash to last a month or so (E&P, March 7, P. 11).

The latest move, however, seems to be the first time the company has put a tangible deadline on a sale or shutdown. …

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