Magazine article Editor & Publisher

Creative Loafing Auction Goes to Judge Today

Magazine article Editor & Publisher

Creative Loafing Auction Goes to Judge Today

Article excerpt

A bankruptcy judge in Tampa Tuesday could settle the question of who should own the alternative weekly chain Creative Loafing -- the CEO whose family founded the business three decades ago or the investment group that loaned the company tens of millions to expand, only to see the papers end up in Chapter 11 protection?

Judge Caryl E. Delano will apparently have only two bids before her in the equity auction for Creative Loafing, publisher of six alternative weeklies including namesake titles in Tampa, Charlotte, N.C., and Atlanta as well as the Chicago Reader and Washington City Paper.

It was for the purpose of buying the latter two papers in 2007 that Creative Loafing borrowed $30 million from Atalaya Capital Management and another $10 million from BIA Digital Partners. The transaction was particularly ill-timed, with the recession eviscerating ad revenue and placing a crushing debt burden on the group.

Now Atalaya, which has agreed to a reorganization plan that will write down the value of its loan to $12 million, wants to buy Creative Loafing. Its initial offer was reported as $2 million in cash.

Creative Loafing CEO Ben Eason has formed a group, including creditor BEA, that has its own offer of $1. …

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