Wednesday, January 21, 2009
News Creative Loafing bankruptcy update: hearing today is stalemate
Posted by Web Editor on Wed, Jan 21, 2009 at 9:00 PM
By Wayne Garcia
Creative Loafing Inc. CEO Ben Eason appeared in federal bankruptcy court in Tampa today in the company’s continuing Chapter 11 case.
It was supposed to be a day-long hearing culminating in a decision from Judge Caryl E. Delano as to whether to allow Eason's biggest creditors — Atalaya Administrative LLC and Atalaya Funding II LP, which loaned more than $30 million to Creative Loafing two years ago to finance the purchase of the Washington City Paper and Chicago Reader — to declare the company's loans in default and take immediate ownership of the alt-weekly chain.
But that 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 until March 11. Both sides, while complaining of the effect of the delays, worked together during an hour-long recess to reconfigure the Chapter 11 timeline for the case.
Eason’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
Two more hearings, to determine the value of the company and approve part of the reorganization plan, are scheduled for late March and early April.
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