Creative Loafing bankruptcy update: hearing today is stalemate
January 21, 2009 at 3:22 pm by Wayne GarciaThe owner of Creative Loafing (principally, Ben Eason, and technically he’s the debtor-in-possession) was again in federal bankruptcy court today in the company’s continuing Chapter 11 case. It was supposed to be a day-long hearing to decide whether Judge Caryl E. Delano should allow the biggest creditors — Atalaya Administrative LLC and Atalaya Funding II LP that lent more than $30 million to CL to finance the purchase of the Washington City Paper and Chicago Reader two years ago — to declare its loans in default and take immediate ownership of the alt-weekly chain.
That possible outcome didn’t happen.
Without going into lots of technical bankruptcy law and financial valuation methodology, I’ll just report that testimony in the hearing didn’t go off as planned and has been continued to March 11. Both sides, while complaining of the effect of the delays (CL’s attorney argued that every day the ownership issue isn’t settled makes it harder to find new equity partners and reorganize the company; Atalaya’s lawyer argued that the value of its collateral continues to decline and is losing the hedge fund millions) worked together during an hour-long recess to reconfigure the Chapter 11 timeline for the case.
Two more hearings, to determine the value of the company and approve part of the reorganization plan, were also scheduled on Wednesday, for late March and early April.
