Creative Loafing bankruptcy: Lender Atalaya would keep CL operating, give it more money
March 11, 2009 at 11:41 am by Wayne GarciaThe Creative Loafing chain is in a Tampa bankruptcy court hearing today as owner Ben Eason tries to fend off his biggest creditor, which wants to take ownership of the chain and says it has “lost confidence” in Eason’s management.
Atalaya Capital Management LP, an investment fund that is owed $31 million from financing CL’s 2007 pay-down of debt and purchase of the Chicago Reader and Washington City Paper, said in court this morning that it would continue to operate the newspaper chain “as a going concern” and put more dollars into it rather than get rid of it in a fire sale.
Atalaya partner Michael Bogdan testified that the firm has hired another investment banking firm with media experience, Bulkley Capital of Dallas, Texas (with an office in Atlanta, the home of CL’s largest newspaper) to advise it and provide “management assistance” in running the CL papers if it is successful in court today. That firm’s founder, Brad Bulkley, has strong media experience, Bodgan said. Bulkley’s website describes it this way:
Brad began his career at Harris Trust & Savings Bank as a commercial lender to middle–market companies in the Midwest. He went on to form and manage one of the largest communications lending divisions in the country at what is presently Bank of America in Dallas. There, Brad was responsible for overseeing the communications lending activities of the parent and sixty–eight affiliate banks. While heading the media lending group, he was responsible for structuring and agenting what, at the time, was the largest acquisition and credit facility in broadcasting history. Under his leadership, the bank’s media effort went from a start–up to the fifth largest communications lender in the country in less than four years. While it was exciting to read about his deals in the national news, the formation of Bulkley Capital enabled Brad to return to the segment of the market he served when at Harris Bank, which he found to be even more gratifying – working closely alongside entrepreneurs, middle–market and family–owned companies to build their businesses for the next generation.
Bogdan said his investment firm would be willing to spend more money to increase revenues at the newspaper chain, but only if it can displace the current management and ownership. He said Bulkley is familiar with alt-papers and advised the Chicago-DC paper owners in their 2007 sale to CL. Bogdan said Atalaya would seek to publish “a quality publication” in order to maximize its investment. He also said the lender is concered about the CL workers. “We’re concerned with the morale of the employees,” a fact Bogdan said he gleaned from “reading in blogs.” Federal Bankruptcy Judge Caryl E. Delano disallowed the blog-related testimony after an objection from CL’s attorney, David Jennis.
The hearing likely will go on all day, with experts from both sides giving testimony about the value of the company, whether it has dropped and why.
March 11th, 2009 at 1:48 pm
The whole chain would be better off under new management. Let’s keep our fingers crossed.
March 11th, 2009 at 1:52 pm
Wayne: Any idea if this claim that they’d keep the company and put money into it makes sense, or is it just something to win over the judge? I don’t understand why they’d keep it.
March 11th, 2009 at 1:55 pm
believe me, morale is low
March 11th, 2009 at 2:08 pm
Another Observer:
As was pointed out to me today, if Atalaya keeps the company, that greatly reduces interest on the loans as an expense, which is substantial. (Presumably they would then owe on the second, smaller loan.)
March 11th, 2009 at 3:21 pm
I don’t think morale could get any lower. We are actually praying the judge gives the company to anyone but CL.
March 11th, 2009 at 4:12 pm
Whet -
it is unlikely Atalaya would have to pay that other debt. It is subordinated.
March 11th, 2009 at 5:36 pm
Whet — Observer is right in that the BIA Digital Partners mezzanine loan of $10 million is subordinate. Of course, it remains to be seen how the bankruptcy court would deal with that debt (cram it down, discharge it entirely) but Observer is likely right that it wouldn’t necessarily be a problem going forward.
March 11th, 2009 at 6:23 pm
Much obliged for the clarification. Thanks for detailing the goings-on, too.
March 11th, 2009 at 7:08 pm
Won’t accept blog testimony? I say all former (and current if you know what’s good for you) loafers send letters to the judge and atalya lawyer about the morale…
March 11th, 2009 at 8:43 pm
Atalaya may be speaking with corporate tongue – they will keep CL going as an active concern though they may well sell off a few of the papers wholesale to get some cash back. So you CL will continue, but the papers in Chicago-Wash-Etc. may be liquidated.
March 11th, 2009 at 8:46 pm
Those of you who are thinking it would be great to have Atalaya as your boss, maybe you should check this out: http://www.bluemaumau.org/6959/benniganrsquos_fresh_out_bankruptcy_heads_court_with_franchisees
March 11th, 2009 at 9:05 pm
“Atalaya … said in court this morning that it would continue to operate the newspaper chain “as a going concern” and put more dollars into it rather than get rid of it in a fire sale.”
And, I have a great deal on a bridge between Manhattan and Brooklyn that I would like to discuss with you.
There is only one way for CLN to survive and that is give a haircut to the creditors.
March 16th, 2009 at 10:34 am
All in the employ of CL in Chicago’s office is perfectly aware that the boys club that bought us bit off more than they could chew and haven’t a clue to sell, manage or inspire.
Let go good ole boys and go Noodling. I hope you get swallowed by dem catfish!!
As far as morale, it is perfectly obvious the employees have nothing good to say about their job enviroment ever.
March 17th, 2009 at 3:02 pm
I sincerly hope that regardless of the trials outcome, each of you take a moment to think about how you could have improve the chances of keeping our jobs. Take ownership of your own counterproductive behavior.
March 17th, 2009 at 9:14 pm
counter productive behavior? since CL’s takeover and then layoffs, i am now covering 4 jobs, 5 when someone is out. on top of that, they reduce hours, cut overtime and hire a marketing director who CL is paying over 3 times more than what they paid the last marking director. so now i am doing 4 jobs weekly, minimum, and getting paid for 36 hours worth of work each week. in order to do all 4 jobs, i am working a at least 45 hours per week. so i guess my questions are who’s job am i supposed to take a moment to evaluate and which job should i focus on improving so i keep it?
March 17th, 2009 at 10:14 pm
I have worked for many years in corporate America and can tell all of you that think that working for a bank looking for the highest bidder to get them out from under Creative Loafing ownership are not going to particularly care about how you do your job. If you think that Ben Eason is the enemy you are so not in tune to what corporate America is about that I wonder where you come from. Do you really think that a bank or a bean counter is going to be touchy feely with you – get real. They don’t care about you. They care about the bottom line and you know who is not on the bottom line – the employees. I really feel that if you want to be successful that you need to prove to the company that you are of value. I also think that all of the negativity that I have read from the Chicago office is not the true feeling of the employees from the original Creative Loafing employees. I know that you feel resentment from the buyout of your company, but there was a reason for that-your company as it was being run was loosing money or the owners would not have put it up for sale. Ben thought that he could put it on the right track and some of you were willing to help and then some of you wanted to fight it because you had a “well oiled machine” – you didn’t realize that your well oiled machine was leaking oil and needed new management- unfortunately between the attitudes and the economy very has worked. I challenge you to be the best you can be – step up to the plate – Quit your old attitude of the way it used to be and go out there and make a difference or we will all be out of a job when the banks takeover and really sell us out – or maybe you are a republican and think that bankers should own the world?
March 18th, 2009 at 8:36 am
I couldn’t have said it better. The only thing I think I need to add. If you don’t like working with CL, find another job! Oh but maybe because the economy as a whole is in the shitter, maybe you can’t find another job and your stuck with CL. Well if your stuck make the best of it, be grateful you have a job, pray the economy begins to grow really soon and then CL will be able to bring back and replace the jobs lost. But to think a new owner is going to make it the way it was before you must be living under a rock. As the Chicago and Washington people have already experienced with a new owner comes change, and not all change is good. Are you ready for more?
March 18th, 2009 at 9:24 am
I can completely relate to your reply “productive”. My comment was meant as more of a constructive than a reprimand.
As with any company, we can all point out individuals that are overpaid, lazy, dishonest, and/or unethical. I am in complete agreement that many of us are overworked, some of us underpaid, and even more are stressed and unhappy. Regardless of who keeps/takes ownership, we all need to think about what we can do to keep the publications going and keep our jobs.
March 18th, 2009 at 12:40 pm
i understand what working for cooperate America is like, hence taking a job at an alt-weekly. it wasn’t cooperate America, illegal practices (i.e. sit on over 60,000 dollars of fraudulent charges [direct order from CL last summer]), and working more than what they will pay you or allow you to report, until CL showed up. it’s uncomfortable and yeah, boarder line illegal and for what, so a group of 5 creeps can line their pockets? Ben’s whole goal is being the leader of this huge alt-weekly empire but he fucked up and won’t admit it and is seeing that if you want to accomplish it, well first off you need to be able to afford it. get another job? why? i like my job. i didn’t apply and accept the position here to get rich. i work here because i am proud of my work. i also didn’t accept the job to be subjected to illegal business practices, fudged numbers, threats by bosses, and being taken advantage of. but if this is just how things work south of the Mason-Dixon Line, so be it. if they would just stop lying then maybe the employees in Chicago and DC would not be negative as every time they try to adjust to the new environment they find it is just more bullshit from a company led by 5 people who thought they could be big time executives. turns out they can’t and also turns out that if you work in Florida (just from what i have gathered from CL), you are happy with slave labor and putting out a sub par product.
March 18th, 2009 at 2:56 pm
LOL>>> hewhocannot
March 19th, 2009 at 1:34 pm
ATL Loafers, past and present, love the paper. What a great group of folks! Never have I worked with such a great group of people. Yet I left voluntarily as did others because of the misdirection coming down from the top.