Thursday, March 12, 2009
News Creative Loafing Inc. bankruptcy hearing continues, CEO testifies today
Posted by Thomas Wheatley @thomaswheatley on Thu, Mar 12, 2009 at 1:15 PM
Our Tampa colleague, Wayne Garcia, is closely following Creative Loafing’s court appearance today in Florida, during which the company’s CEO is arguing to maintain ownership of his six newspapers. Here’s Garcia’s second post from yesterday's proceedings:
From an afternoon of Ph.D.- or MBA-level financial testimony, here’s the bottom line in the hearing for control of the Creative Loafing chain of alternative weekly newspapers:
– Lender Atalaya Capital concluded its case with testimony from Deloitte valuation expert Stamos Nicholas, who went through a detailed report he produced that concludes Creative Loafing’s value as a company dropped from $19 million on Sept. 30, 2008 — a day after it filed for Chapter 11 bankruptcy protection — to $11.4 million by Dec. 31, 2008. Nicholas blamed falling revenues and operating margins at the chain, as well as a general economic collapse in the wider economy.
CL’s attorney Tim Andreu challenged Nicholas’ report on cross-examination, pointing out that Nicholas did not speak with the chain’s management to learn more details about the financial assumptions he used for his valuation.
– CL’s case starts tomorrow afternoon at 1:30 with testimony from Creative Loafing CEO Ben Eason. CL’s own financial examination of the company puts the value much lower than Nicholas’ assessment and shows an increase in value over that same three-month time frame.
– The hearing will then be continued until Tuesday of the following week to hear from the company’s CFO and a Tampa Bay business valuation expert, after which Judge Caryl E. Delano (at some point) will rule on Atalaya’s motion to gain control of the company. Atalaya is owed $31 million from its fnancing of CL’s 2007 purchase of the Chicago Reader and Washington City Paper.
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