Creative Loafing bankruptcy: No ruling tonight in ownership issue
March 17, 2009 at 5:41 pm by Wayne GarciaDon’t wait up for a decision in our Tampa bankruptcy court hearing today; Judge Caryl Delano said early this evening that she did not plan on ruling immediately on whether lender Atalaya Capital Management should be allowed to declare Creative Loafing in default of its $31 million in loans and take over the alt-weekly chain.
Testimony was continuing into the evening in the hearing. Creative Loafing’s valuation expert, Michael Mard of Tampa’s Financial Valuation Group of Florida, testified through all of Tuesday afternoon about his assessment that the chain absorbed most of its losses and revenue declines before its Sept. 29, 2008, Chapter 11 bankruptcy filing. He put the value of the company at $7 million on Sept. 30; $12 million on Dec. 31, 2008; and $13 million by February of this year.
Mard’s values were opposite the trend shown by Atalaya’s own valuator, who said the chain has lost $7 million in value since declaring bankruptcy.
The valuation is important because Atalaya is asking the court to lift its automatic injunction against enforcing its default, arguing that the value of its loan collateral (the company itself) is diminishing while it has no ability to enforce its loan covenants or make changes at the company.
Delano said she will ask both sides to submit closing arguments in writing after tonight’s testimony concludes, and then will take several days to consider the issues before making a ruling in an as-yet unscheduled telephone conference call with the two parties.
Stay tuned.
