Creative Loafing heads to bankruptcy court to reorganize
September 29, 2008 at 2:20 pm by Wayne GarciaOur parent company filed a Chapter 11 reorganization case in federal bankruptcy court this morning, the result of a slowing economy exacerbated by debts it took on in May 2007 in buying the Chicago Reader and Washington City Paper alt-newspapers.
CEO Ben Eason
“I don’t see this as bad news,” CL’s CEO Ben Eason said at a noon staff meeting in Tampa. Many other media companies have been hurt in this economy, and others are successfully reorganizing their finances or changing the terms of their debt to cope, he added.
Eason addressed staff in Tampa this morning to announce the legal action after the media company’s board voted early this morning to file in bankrtupcy court in Tampa. He was upbeat about Chapter 11’s ability to ease the debt crunch the newspaper chain is facing as it tries to increase its online presence while at the same time dealing with falling print revenues because of the housing crisis and resulting slower economy.
“This company has got cash,” he said. “This is not a cash issue. This is not a management issue. It’s strictly the economy tanking.”
Eason continued: “This company is not a sinking ship. We have an excellent shot at coming out of this with a fresh start” and redrawn debt repayment terms.
Eason added that employees and vendors would continue to be paid and the newspapers in six U.S. markets would continue to publish weekly. No layoffs or other changes are anticipated as part of the Chapter 11 case, he said.
Ironically, CL was poised across all its newspapers to make cuts in its editorial budgets by the end of October in an attempt to free up more cash to make debt payments. With the debt issue on hold because of the bankruptcy court action, Eason said he has told editors those cuts now do not have to be made. The cuts had not been revealed here in Tampa, but in Washington they had been the focus of stories in the press for about a month.
The bankruptcy filing was caused by an inability to generate enough revenues in the current advertising sales slump nationally to satisfy the debt payments and terms of the debt taken on in the purchase of the Chicago and Washington papers last year.
Chapter 11 of the federal bankruptcy code shields a company from its creditors while it puts together a reorganization plan that must be approved by the court. While it is possible that the court could take many different actions — from dissolving the company to forcing its sale or breakup — Eason said those actions are highly unlikely in CL’s case. “We’re going full steam ahead” in growing the newspapers’ online presence, he said. “Just watch us.”
Among the largest unsecured creditors is Fayetteville Publishing Co., which prints the Tampa Bay edition and some of the other papers in the group. The Georgia Department of Labor, the Georgia Department of Revenue and the IRS are also among the creditors. The listing of creditors on a bankruptcy filing doesn’t indicate, as some news accounts suggested, that Creative Loafing was not paying its vendors or taxes, Eason said; it is merely a court-required list of those companies that do business with CL.
Creative Loafing was founded in 1972 by Debby Eason in Atlanta and later opened several other papers in the Southeast. Ben, who owned the Tampa paper, acquired the rest of the family newspapers in 2000.
September 29th, 2008 at 4:20 pm
Please correct your error. It is the Washington City Paper, not the Washington City Times, that is part of this bankrupt company.
September 29th, 2008 at 4:23 pm
What a load of crap! Lessee… outside of not paying the guys that print the paper, all is just peachy.
“This isn’t a cash issue.” Right. It’s just an “I gotta safeguard my boat and luxury condo while I drive this company into the ground and screw everyone who works for me” issue.
Nice going, Benji.
September 29th, 2008 at 4:35 pm
Jule — error corrected,sorry about that with the haste earlier this afternoon. As for your error, we are not bankrupt. Per AP style, we are in bankruptcy court. Bankrupt means out of money and being liquidated.
September 29th, 2008 at 4:56 pm
Point taken. In legal terms, you are correct.. However, second def. in Webster’s New World:
bankrupt: anyone unable to pay his or her debts.
Thanks for the correction.
September 29th, 2008 at 5:27 pm
Being in bankruptcy court means you are bankrupt. CL is now the debtor in possession in bankruptcy. Granted it is a reorganization and not a liquidating bankruptcy but calling it otherwise is mere semantics. I had thought the estimable PoHo was adverse to spin and was all about candor and calling a spade a spade (though you seem to identify more Republican spades than Democrat ones). Surely if CL can not make its debt payments as due it is in financial distress and needs bankruptcy relief to remain operable. Not much use in sugar-coating it.
September 29th, 2008 at 5:41 pm
Say what you will, but through good times and bad, Ben Eason still has the best hair in the business.
September 29th, 2008 at 5:47 pm
Yeah. That’s what all the people he’s sacked over the past year in Chicago and DC are thinking. Thank god Ben Eason has good hair.
September 29th, 2008 at 5:50 pm
I’m sure the bankruptcy court will take his coiffure under advisement.
September 29th, 2008 at 6:07 pm
Hmm, maybe irony did die after 9/11 …
September 29th, 2008 at 8:03 pm
Not sugar coating it, just being accurate. the common use of the word bankrupt means to be broke. We aren’t broke. Journalists write by AP style, which makes the distinction between being broke (bankrupt) and seeking protection from your creditors in federal bankruptcy court. I covered bankruptcy court for a year for the Tampa Tribune so I have some experience here. Precision in journalism and communications is always a matter of semantics. Why not be correct and precise whenever you can instead of being vague and overarching in your descriptors?
September 29th, 2008 at 8:18 pm
To me still sounds like being a little bit pregnant.
September 29th, 2008 at 8:55 pm
OK, Wayne. So explain the finer points of this “Not Bad News.” Name another media company that has “reorganized their finances” by declaring Chapter 11 and “coming out of this with a fresh start.”
Eason will lay off everybody and concentrate on the web…. which means a staff of three people managing whatever free blogs they can muster up under the Loafing.com banner, which is exactly what’s happening in DC to a once-great paper.
September 29th, 2008 at 10:33 pm
Sheri — I didn’t say it wasn’t bad news, Ben said that. You’d have to ask him further if you have doubts about his statements. You are confusing the reporter with the folks making the news. I am not on the board of directors; I did not vote to file Chapter 11.
September 29th, 2008 at 11:41 pm
Ooooh… Sheri got owned!
September 30th, 2008 at 11:04 am
Sorry, I have a hard time taking comments by someone who refers to themself as “Political Whore.”
September 30th, 2008 at 1:06 pm
Well, I have been considering renaming the blog to “Serious Political Thoughts and Issues with Wayne Garcia” but the domain name is already taken
September 30th, 2008 at 2:24 pm
Damn, Wayne, I wanna give you a hug. Jeezy creezy …
October 16th, 2008 at 10:28 pm
I’m sorry, but how are we not “broke”? You say the term bankrupt implies we’re broke, but from what I can find, the term broke implies a) we’re bankrupt and b) we’re lacking funds. We have filed for bankruptcy and are lacking funds, so how are we not broke?
March 6th, 2009 at 3:16 am
Hello, free we city
?nternational Spacenuke.
good-by