Fun CL bankruptcy news! - UPDATE

(UPDATE — For reasons beyond our understanding, the bankruptcy court’s next hearing date will be Wednesday, July 29, rather than Monday, as indicated below.)

Those who still care have their calendars marked for Aug. 25, the date of the Great CL Equity Auction that will determine the future ownership of our li’l old alt-media empire. But wait! There’s a new deadline looming on the horizon for the truly obsessed. That’d be July 27, this coming Monday, the fateful day when the lovely and talented bankruptcy Judge Caryl Delano in Tampa sets the rules of the aforementioned auction.

According to CL CEO Ben Eason in a new interview with Chicago Reader media critic Micheal Miner, the rules of the auction could either boost or destroy his chances of hanging on the company. That’s because Atalaya Capital Management, CL’s primary creditor, already has $31 million sunk into the company. Unless the judge places restrictions on how the bid money must be spent, Atalaya could, theoretically, bid up to $31 million to win the auction, then pay itself off and take sole ownership of the company.

Still awake? Here’s Eason’s take:

“What the issue really is is who’s going to keep their money in. Who’ll be involved in this thing for the long haul. It appears the way Atalaya is coming at this they’ll put their money in and immediately take it out. That’s part of their financial engineering, it’s a typical Wall Street hedge fund being slick with the money. But we’re looking to make sure that whoever bids at the equity auction truly wants to hold the company.”

In other words, although this isn’t made explicit in the Miner piece, Eason expects the judge to mandate that a sizable chunk, if not all, of the money represented by the winning bid must be invested directly into the company to ensure its continued viability.

And if that doesn’t happen?

“It’s over,” said Eason. “It’s the same thing as a foreclosure.”