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Wednesday, July 29, 2009

Crucial CL bankruptcy hearing starts ... now — UPDATE

UPDATE: According to the St. Petersburg Times, the judge determined today that she won't issue a decision on the rules of the CL's equity auction until the actual auction day. Details below.

Our colleague Wayne Garcia, at our sister paper in Tampa, is keeping us in the loop on the latest hearing in the ongoing battle to determine who will be the owner of the six-newspaper Creative Loafing Inc. chain, the second-largest alt-weekly conglomerate in the country.

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Currently, the battle is between current owner Ben Eason, whose family founded the chain, and Eason's largest creditor, hedge fund Atalaya Capital Management.

Today's hearing will was expected to finalize some important rules for the Aug. 25 equity auction, which will determine who will control the company. But the judge decided to hold off on finalizing the rules until the very day of the auction.

The St. Pete's Times reports:

Creative Loafing, the weekly alternative newspaper chain based in Tampa, fears a bankruptcy auction of its stock next month could break up the company.

On Wednesday, representatives of Ben Eason, whose family started Creative Loafing more than 30 years ago, appealed to a judge to block its largest creditor from winning the auction....

Eason fears the deep-pocketed Atalaya could blow away other bidders, including Eason himself, and begin liquidating the company for cash as early as September.

Garcia, in Tampa, characterized the courtroom proceedings as "complex, confusing and undramatic." He also writes that Atalaya has expressed interest in investing in Creative Loafing, should the hedge fund become the newspaper chain's owner. Garcia also points out that Atalaya has claimed it intends to run the company, not liquidate it:

Atalaya, during hearings earlier this year, also said it plans to operate the business as a news media company and has a management consultant lined up. It also said it would make an additional $1 million line of credit available to the new CL if it is the successful bidder, for operational needs. “We’ve committed some real money here,” [Atalaya’s lawyer Tyler] Brown said in court.

(Photo by Joeff Davis)

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